KARACHI – The State Bank of Pakistan has allowed banks to accept personalguarantee of third party for low-cost house financing to cover mortgagerisks.
In a statement on Monday, the central bank said applicants currently facedifficulties to obtain housing finance, especially for low-cost housing asbanks are reluctant to take the risk of the house left incomplete ordocumentation completion.
With an aim to facilitate banks in extending low-cost housing finance toapplicants, SBP has allowed them to accept personal guarantee of thirdparty until the housing unit is completed and the mortgage is finalized.The guarantee remains valid for a maximum period of one year.
“This step will help promote homeownership of potential borrowers wishingto avail housing finance under government markup subsidy scheme issued byState Bank of Pakistan on October 12, 2020,” said the central bank.
The State Bank of Pakistan has issued five regulatory relaxations toincentivise banks to promote low-cost housing finance in the country.
Read Top Stories
Banking industry can enjoy markup subsidy facility by the government andregulatory incentives under low-cost housing finance.
The value of housing unit has been increased from Rs3 million to Rs3.5million and maximum loan size from Rs2.7 million to Rs3.15 million.
The third-party guarantee will cover the period from the disbursement ofloan to the time when construction is completed and risk coverage becomesavailable by Pakistan Mortgage Refinance Company (PMRC).
