Karachi— The Pakistan Mortgage Refinance Company, otherwise known as PMRC, has set aside a budget of Rs 15 billion— a Credit Guarantee Trust— in order to aid affordable, low-cost housing. This project aims at covering any housing finance loss of the banks.
The PMRC is working in association with the Bank of Punjab to encourage the banking sector to extend its existing finance period up to approximately 25 years. This project is designed in a way to give banks a credit guarantee of 2% for a decade i.e., 0.2% per annum. According to the proposal, the rest of the 40% will be covered by the Rs 15 billion that has been set aside by PMRC.
The Prime Minister’s low-cost housing initiative
This initiative falls in line with the Prime Minister’s Low-Cost Housing Scheme with the goal of creating 5 million low-cost settlements. A majority of banking institutions that have agreed to provide such housing schemes financial services under the Naya Pakistan Housing Scheme have expressed plans on availing the credit guarantee fund as early as next week.
Previously, the State Bank of Pakistan had incentivized the banking community to advance low-cost housing projects. Banks were asked to set aside a minimum of 5% of their total loan holdings—making up an estimated Rs 330 billion— for the construction and development of these low-cost housing projects.
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