Who can apply for SBP’s Markup Subsidy Program for Housing Finance?

In order to provide affordable housing to the masses, the Government of Pakistan will be providing a markup subsidy facility for the construction and purchase of new houses.

This facility will allow all individuals, who will be constructing or buying a new house for the first time, to avail the bank’s financing at subsidized and affordable markup rates.

The facility will be provided with the administrative support of State Bank of Pakistan as executing partner with Government of Pakistan and Naya Pakistan Housing and Development Authority (NAPHDA). Government of Pakistan has allocated Rs. 33 billion for payment of markup subsidy for financing over a period of 10 years and has assured continuity of the facility.

Here are the key features of the Markup Subsidy Program:

Eligibility Criteria

• All men/women holding CNIC • First time home owner • One individual can have subsidized house loan facility under this scheme only once • Only for construction and first purchase of newly constructed affordable housing units

Size of Housing Unit

Size of the loan is segregated into three tiers, as under:

• Tier 1 (T1) - Housing Units/apartments of up to 125 square yards (upto 5 Marla) with covered area of up to 850 square feet. (NAPHDA) • Tier 2 (T2) - Housing Units/apartments of up to 125 square yards (5 Marla) with covered area of up to 850 square feet. • Tier 3 (T3) - Housing Units of more than 125 square yards up to 250 square yards (10 Marla) or apartments with covered area from more than 850 square feet to 1,100 square feet.

Maximum Price of Housing Units

Maximum Price (Market Value) of a single housing unit at the time of approval of financing, as under:

• Tier 1 (T1) - Rs 3.5 million • Tier 2 (T2) - Rs 3.5 million • Tier 3 (T3) - Rs. 6.0 million

Maximum Loan size

Maximum size of the loan of a single housing unit, as under:

• Tier 1 (T1) - Rs 2.7 million • Tier 2 (T2) - Rs 3.0 million • Tier 3 (T3) - Rs. 5.0 million

Loan type

Long term housing finance loans

Loan Tenor

10/15/20 years, depending upon the choice of customers.

Security Requirements

As per the banks’ credit policy and prudential regulations for housing finance, the housing unit financed will be mortgaged in favor of financing bank.

Allocation in Budget

Finance Division shall give authority to SBP to debit GOP account on quarterly basis for the subsidy payment to banks. Payment will be made to the banks on submission of quarterly-consolidated subsidy statement as per format prescribed by State Bank of Pakistan.

Pricing

Pricing for Housing Loans:

For Tier 1 loans, Customer Pricing is 5% for first 5 years & 7% for next 5 years, whereas Bank Pricing is KIBOR+250 BPS.

For Tier 2 loans, Customer Pricing is 5% for first 5 years & 7% for next 5 years, whereas Bank Pricing is KIBOR+400 BPS.

Whereas for Tier 3 loans, Customer Pricing is 7% for first 5 years & 9% for next 5 years, whereas for Bank Pricing the spread may vary.

For loan tenors exceeding 10 years, market rate will be applicable for the period exceeding 10 years.

Executing Agency

All commercial banks including Islamic banks and House Building Finance Company Limited (HBFCL)

Application Form

A standardized Application Form both in English and Urdu will require minimum essential information with simple format. The processing time will not exceed 30 days after submission of all documents by the borrower and the same will be clearly stated in the application form.

Standardized Procedures

Banks to have standardized loan documents and risk acceptance criteria.

Monitoring

SBP will publish consolidated information about the loans extended under this program for information of the public on quarterly basis on its website.

Geographical distribution

Whole of Pakistan.