SBP issues housing loan repayment mechanism – Journal
KARACHI: The State Bank of Pakistan (SBP) has developed a comprehensive mechanism for paying the supplemental subsidy for housing finance and sent it to banks and development finance institutions (DFIs) working as executing agencies (EAs) for the installation.
In a detailed circular sent to all banks and DFIs on Tuesday, executing agencies were invited to submit their requests to the Development Finance Support Department (DFSD), SBP BSC, Karachi within 15 working days from at the end of each quarter.
However, RAs will submit their request within 15 working days for the quarter ending December 2020 and March 2021 from the date of issue of this Circular.
SBP said EAs will assess client financing requests according to the parameters of the Federal Cabinet approved housing finance supplement subsidy program disseminated by the State Bank of Pakistan to all banks / DFIs. on March 25, 2021 and revised from time to time. .
The government has launched the subsidy-to-mark-up program to provide concessional housing finance to promote home ownership. The SBP has issued the necessary instructions to all EAs, including commercial banks, microfinance banks and HBFCL.
Under this program, loans are divided into four levels. Level 0 (T0) a house up to 125 square meters (5 Marla) and (b) an apartment or apartment with a maximum covered area of 1,250 square feet; a customer will pay 5% for the first five years and 7% for the following 5 years.
For level 1, a house up to 125 square meters (5 Marla) with a maximum covered area of 850 square feet and (b) an apartment or apartment with a maximum covered area of 850 square feet, the interest rates for this category are 3pc for the first 5 years and 5pc for the next 5 years. For level 2, a house up to 125 square meters (5 Marla) and (b) an apartment or apartment with a maximum covered area of 1,250 square feet; a customer will pay 5pc for the first 5 years and 7pc for the next 5 years.
For level 3, a house up to 250 square meters (10 Marla) and (b) an apartment or apartment with a maximum covered area of 2,000 square feet. A customer will pay 7pc for the first 5 years and 9pc for the next 5 years.
“For loan maturities greater than 10 years, the market rate, that is to say the bank pricing, will be applicable for the period greater than 10 years”, specifies the SBP circular.
The financing facility for a borrower will be sanctioned and disbursed by the EA after completion of the documentation formalities.
“No further assessment on borrower eligibility would be conducted by the State Bank of Pakistan,” SBP said.
For the first five years, an Equal Monthly Installment (EMI) amortization schedule would be prepared for the full term of the funding at the mark-up rate, i.e. 3pc, 5pc or 7pc depending on the funding level.
Posted in Dawn, April 21, 2021