House Building Finance Company Limited

Housing is a basic human need and all countries make efforts to provide decent accommodations at all levels of societal strata. Unfortunately, in Pakistan, housing is still a dream for a very vast majority of population. Mortgage financing is still at the developing stage in Pakistan. With mortgage financing at about 0.5% of GDP, Pakistan is far behind internationally as well as regionally in housing finance. There are a number of reasons for this market failure: high land prices, high cost of construction, inadequate infrastructure, legal and regulatory impediments, lack of depth in mortgage market, are some of the major reasons behind this situation.
There is a shortage of over 10 million house units in the country. It is estimated that the deficit of housing continues to add up by approximately 700,000 housing unit per annum. About 70% of this deficit is in affordable housing for poor.
House Building Finance Company Limited (HBFC) is the only housing finance institution in Pakistan established in 1952 to provide housing finance to low and low-middle income citizens. HBFC provides financing facilities for construction and purchase of house or apartment through its deep rooted and national footprint of 51 branches, 3 regional offices, 7 area offices and the head office based in Karachi. State Bank of Pakistan and Ministry of Finance jointly hold shares of HBFC.
As a matter of mandate, HBFC has focused on providing house financing for the housing needs of low and low-middle income socio-economic sector. The vision of HBFC is to provide affordable housing solutions to low and low-middle income groups of population by encouraging new construction in affordable housing sector. Presently, nearly 60% of HBFC's clientele is of the lower income demographics with loan amount of less than PKR 1,500,000.
HBFC has actively developed products to accommodate its target market to include repayment plans of up to 20 years period. Over the years HBFC has developed and offered housing finance products based on the needs of clientele.
"Ghar Asaan Flexi" is the major housing finance product for the masses. It offers financing up to PKR 25 million in major cities and PKR 10 million in other cities for a period of up to 20 years. It is based on Diminishing Musharka mode of financing at variable rates.
Keeping in view the deteriorating affordability of low income citizens and rising interest rates, HBFC has recently launched its new product "Ghar Pakistan". It is the first fixed rate housing finance product in the history of Pakistan. "Ghar Pakistan" offers financing up to PKR 2.5 million at the fixed rate of 12% per annum for a maximum period of 20 years. Citizens having income up to PKR 100,000 are eligible for this loan. "Ghar Pakistan" is a milestone towards implementing the Prime Minister's vision of providing accessible housing to low and low-middle income population of Pakistan.
Also, on February 19th 2019, HBFC and Pakistan Mortgage Refinance Company (PMRC) signed Master Refinance Agreement. Under the agreement, PMRC will provide long term fixed rate funding of up to PKR 3,600 million to HBFC for providing home loans to customers. This agreement is yet another milestone towards implementing the government vision of providing affordable housing finance products to low income groups. With innovation in its products, HBFC is further gearing up to enhance mortgages rapidly to reduce the demand-supply gap of housing in the country.