Highest housing loans disbursed in February

KARACHI: The disbursement of loans for low-cost housing witnessed the highest increase of Rs9.3 billion in February FY22, highlighting no uncertainty despite the ongoing political crisis in Islamabad, data released by the State Bank of Pakistan (SBP) showed on Thursday.

Total disbursements under the Mera Pakistan Mera Ghar (MPMG) reached at Rs53.074bn at the end of February 2022, the SBP data showed.

The government launched the MPMG scheme in October 2020 and announced a number of incentives along with subsidised mark-up rates. The scheme aims to boost the housing sector in Pakistan so that economic activities could be accelerated in the country.

However, banks were reluctant to disburse loans for this scheme and initially the response was poor. The government made it mandatory for banks to spend five per cent of their total private sector credit.

The data shows that the financing for MPMG accelerated during Dec-Feb FY22. The total disbursement till end of Nov 2021 was Rs28.744bn, while it reached Rs53.074bn at the end of Feb 2022.

During the three months under review, the disbursement under the scheme increased by 46pc to reach Rs24.33bn. Further details showed that the disbursement during the first eight months of the current fiscal year were Rs47.852bn.

Despite the increase in the disbursements, the scheme has yet not reached up to the expectations of the government and the SBP. The central bank has been trying to make the scheme successful and has involved large number of banks to participate in the scheme.

As per the scheme, the borrowers will be charged financing rate of 3pc for first 5 years, 5pc for next five years and Kibor (Karachi Inter-Bank Offered Rate) plus 350 basis points for the remaining financing tenure.

Available in both conventional and Islamic mode, the scheme enables banks to provide financing for the construction and purchase of houses at very low financing rates for low to middle income segments of the population.

SBP is the executing partner with the Government of Pakistan and Naya Pakistan Housing and Development Authority.