March 18, 2026 (MLN): The government has revised key features of its affordable housing finance scheme, lowering borrowing costs and expanding loan limits to stimulate uptake in a sluggish housing market, according to the Circular issued by the State Bank of Pakistan (SBP).
Under the updated framework, the end-user financing rate has been fixed at 5%, down from as high as 8% for certain borrowers under the earlier structure.
The revised rate will also apply retrospectively to loans already disbursed at 8%, ensuring uniform pricing across beneficiaries.
The maximum loan size has been significantly enhanced to Rs10 million, compared to the previous tiered structure that capped financing between Rs2 million and Rs3.5 million.
The eligible property size has also been expanded, allowing financing for houses of up to 10 marla (2,720 sq. ft.) and apartments of up to 1,500 sq. ft.
The changes apply to the government-backed “Mera Ghar – Mera Ashiana” scheme, launched in 2025 to support first-time homeowners through subsidized markup rates and partial risk coverage for lenders.
Previously, the scheme offered a two-tier pricing structure, with subsidized rates of 5% and 8% linked to loan size, while banks priced loans at a spread over KIBOR.
The latest revision simplifies the structure and sharply reduces borrowing costs for a broader segment of applicants.
Other parameters, including eligibility criteria, loan tenor of up to 20 years, and risk-sharing arrangements, remain unchanged, the central bank said in its circular issued to commercial banks, microfinance banks, and the House Building Finance Company.
The move signals a policy push to revive mortgage financing and improve housing affordability, as high interest rates in recent years have constrained demand in Pakistan’s real estate sector.
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