The pace with which Pakistan’s population is increasing is matched by the growing need for real estate. And for that purposes, proper planning for housing schemes and infrastructure needs to be taken so that everyone can be accommodated. World Bank is now coming to Pakistan’s aid as it looks to providing a house finance plan to meet the growing demand for residential units.
World Bank will be working with National Bank of Pakistan (NBP) and Pakistan Mortgage Refinance Company (PMRC) to provide people with easy financing for residential units. World Bank will provide funds for the residential units to the banks through PMRC only. A delegation from the World Bank met NBP President Saeed Ahmed and PMRC officials to discuss the possibility.
Saeed Ahmed said that they are looking to get support from the government to continue with the housing finance. He said that if the government could provide land for free, building a small house of one room with kitchen and attached bath will cost around Rs.1-1.2 million only. For now, only Punjab government has shown interest in providing free of cost land to build low-income housing project.
Banks in Pakistan have been reluctant to provide house financing due to long-term financing plans and poor recovery process. By working with the World Bank and PMRC, banks will get a chance to expand their house financing portfolio on a profitable basis. World Bank will be providing these finances at 0.5-1% only.
World Bank will not only lend funds for housing schemes but it will also provide technical assistance on those projects and provide its support to increase mortgage lending in Pakistan. The project will be helpful to the low-income segment who will now be able to get their own residential units at low financing rates.
The financing scheme will also help overcome the shortage of housing units in the future. Shortage of financing units in Pakistan stood at 7 million a few years back and will now have crossed the 10 million mark, according to Saeed Ahmad.
A memorandum will be signed between PMRC and World Bank after which PMRC will invite commercial banks to promote and develop the house financing scheme.