Skip to main content

NEWS | Housing loan growth

 


THE State Bank and Pakistan Banks Association have claimed that the housing and construction loans portfolio of banks has grown by Rs54bn to Rs202bn from July to March compared to a stagnant position in the same period last year. “Such growth in housing and construction finance in such a period has never been witnessed in the country’s history,” the joint statement reads. It says that bank financing for housing and construction is likely to increase significantly as mortgage finance activity under the Mera Pakistan, Mera Ghar scheme picks up. SBP data on house-building loans paints a different picture though. It shows the stock of housing finance to citizens has risen by just Rs13.7bn to Rs93.5bn. If house-building advances to bank employees — the stock of which has grown by Rs25bn — is also considered, the total housing finance portfolio increases by Rs38.8bn to Rs228.3bn. Even construction loans to developers/builders for residential buildings have grown by merely Rs11bn.

Data discrepancies apart, there is little doubt that mortgage finance is slow to grow despite tax and interest rate incentives and housing subsidies announced a year back for developers, builders and potential homeowners. There is broad consensus that the scheme is mostly used by tax cheaters to whiten illegal money. Although the SBP requires banks to boost their housing and construction finance portfolios to at least 5pc of their private-sector advances by end 2021, they appear reluctant to comply. For starters, the banks are not comfortable with the existing foreclosure laws and want a mechanism whereby they can repossess the property without involving the courts in case of a default. Then most potential homeowners are not ‘bankable’ as they lack a credit/payment history. Moreover, there is a housing supply gap as developers aren’t prepared for risks unless they are certain of confirmed demand. The government has recently increased the interest rate subsidy to give another push to affordable housing besides boosting financing limits for prospective homeowners, but the impact won’t be known immediately. The statement mentions the measures being taken to redress loan-seekers’ complaints and develop a model for income assessment and credit worthiness evaluation based on demonstrated expenses like rent payments, utility bills, etc. But these measures will help only so much. A better idea is to develop more effective foreclosure laws to give banks confidence besides pushing those who have used the amnesty to invest in affordable housing according to the size of the gains they have reaped.

Labels:

Comments

Post a Comment

Popular posts from this blog

NEWS: ICCI calls for Reducing Property Tax on Auto Market Plots

ISLAMABAD:  The Islamabad Chamber of Commerce and Industry (ICCI) on Sunday urged the government to reduce property tax on plots belonging to auto markets. The statement was made by ICCI President Sardar Yasir Ilyas Khan during a visit of a delegation of the Islamabad Auto Market, I-10/3, Traders Welfare Association (TWA), led by its TWA President Musharraf Janjua and TWA Secretary General Salawar Khan Afridi who had come to highlight the issues of their market for redress. The ICCI president said that property tax on auto market plots had been increased from Rs6,440 to Rs14,000 in one go. Terming it an unjustified act, he urged the government for bringing property tax down to the previous level for providing relief to auto market traders. The auto traders further complained that water charges for auto market have also been increased from Rs1,750 to Rs4100, which was a massive increase and demanded that the charges should be rationalised to make them affordable. Speaking at th...
Post a Comment
Read more

NEWS: Construction work on five mega projects in Lahore likely to begin next month

  Construction work on five mega projects in Lahore likely to begin next month LAHORE: The construction work on five mega development projects worth over Rs20.5 billion is likely to begin in the provincial capital by the end of next month, as preparations related to qualification of contractors, bidding process, award of contracts, transfer of funds etc are underway these days. The projects proposed to be launched soon included construction of a flyover at Sheranwala Gate, an underpass at Ghulab Devi Hospital and additional lanes on the Lahore Bridge (Ferozepur Road), a flyover at Shahkam Chowk, construction of five underpasses on The Mall, and resolving traffic congestion at Barkat Market (Garden Town) Y-junction. However, the Karim Market (Allama Iqbal Town) intersection flyover and an underpass project has been delayed for six months because of non-availability of funds in the ongoing fiscal year. “It has been decided in principle to launch these projects in the city, as the Lah...
Post a Comment
Read more

NEWS: Construction, mining machinery imports reduced by 32.86pc

  During the period under review, Other Appartus imports also came down by 5.20%, valuing $216,637 thousand imported as compared the imports worth $228,509 thousand of same period of last year. ISLAMABAD: Construction and Mining machinery imports, during first six months of current fiscal year, have reduced by 32.86 per cent as compared the corresponding period of the last year. According to Pakistan Bureau of Statistics (PBS), the Construction and Mining machinery imports came down from $ 80,871 thousand in Fy 2019-20 of last financial year to US $ 54,294 thousand of the same period of current financial year. During the period of July-Dec 20 this year, imports of Textile Machinery reduced by 0.52 per cent, worth $230,911 thousand as compared the imports valuing $ 232,129 thousand of same period of last year, it added. Meanwhile, Electric Machinery and Appartus imports decreased by 46.26%, worth $640,704 thousand as compared the imports of valuing $1,192,274 thousand of the corresp...
Post a Comment
Read more