State Bank Unveils ‘Mera Ghar – Mera Ashiana’ to Revolutionize Affordable Housing
ISLAMABAD: In a major push to boost homeownership among low and middle-income citizens, the State Bank of Pakistan (SBP) has officially launched a landmark Markup Subsidy and Risk Sharing Scheme, titled ‘Mera Ghar – Mera Ashiana’ (My Home, My Nest).
The ambitious scheme, introduced through a circular to all financial institutions, aims to make housing finance accessible by significantly reducing the financial burden on first-time buyers. The government will bear the bulk of the markup cost, making loans affordable for a wider segment of the population.
Key Benefits for Citizens
Under the scheme, eligible Pakistani citizens who do not already own a home can benefit from heavily subsidized financing. The end-user pricing has been fixed at two attractive tiers:
- A remarkably low 5% per annum for loans up to PKR 2.0 million.
- An 8% per annum rate for larger loans between PKR 2.0 million and PKR 3.5 million.
This is a substantial discount compared to standard market rates. The government will subsidize the difference between this fixed rate and the bank’s actual pricing, which is set at One Year KIBOR plus 3%. This subsidy will be provided for the first 10 years of a loan that can extend up to 20 years.
Further easing the path to ownership, the scheme mandates a 90:10 Loan-to-Value (LTV) ratio, meaning applicants only need to provide a 10% down payment. In a customer-friendly move, the SBP has directed Participating Financial Institutions (PFIs) to charge no processing fees and impose no penalty for prepayment.
Eligibility and Scope
The scheme is designed exclusively for first-time homeowners who are Pakistani CNIC holders. It covers a wide range of housing needs, including:
- Purchase of a new house or flat.
- Construction of a house on an already owned plot.
- Purchase of a plot and subsequent construction of a house.
The housing units must be of a specified size, limited to a house of up to 5 Marla or a flat/apartment of up to 1360 square feet.
Risk Sharing to Encourage Bank Lending
To ensure widespread participation from banks, the government has introduced a risk-sharing mechanism. It will provide 10% risk coverage on the outstanding portfolio of these housing loans on a first-loss basis. This measure is expected to encourage all commercial banks, Islamic banks, microfinance banks, and the House Building Finance Company Limited (HBFCL) to actively lend under the scheme.
Financial analysts are hailing ‘Mera Ghar – Mera Ashiana’ as a potential game-changer for the affordable housing sector. By addressing key hurdles—high markup rates, large down payments, and bank risk aversion—the scheme is poised to unlock the dream of homeownership for thousands of Pakistani families and stimulate economic activity in the construction industry.