Housing & Construction Under MPMG Show Impressive Growth

Web Desk — The housing and construction finance sector jumped by Rs163 billion, or 85%, in 2021, reaching Rs355 billion.

State Bank of Pakistan (SBP) reported Thursday that disbursements under the government’s markup subsidy scheme, Mera Pakistan Mera Ghar (MPMG), increased by Rs38 billion in the housing and construction portfolio. It added that housing finance had stood at Rs192 billion in 2020.

On the back of enabling regulatory measures introduced after extensive consultations with stakeholders, housing and construction financing, particularly under the MPMG scheme, grew impressively.

Additionally, the SBP advised banks to increase housing and construction finance portfolios to at least 5% of domestic private sector advances by December 2021, introducing a set of incentives and penalties to ensure compliance.

According to the statement, financing under MPMG gained momentum in 2021 as approvals from banks grew from near zero to Rs117 billion.

The SBP said banks have received applications for Rs276 billion worth of assistance from potential customers, an indication that approvals and disbursements will continue to rise in the future.

It said it had taken a number of steps to make it easier for banks to increase the flow of financing to the housing sector.

One of the key initiatives was to allow the acceptance of third-party guarantees during the construction period, to waive the debt burden ratio (DBR) for informal income, and to introduce standard facility offer letters by banks.

In addition, the State Bank of Pakistan advised banks to develop and implement income estimation models for borrowers with informal sources of income.