Housing Finance Scheme Markup Rate Reduced by Government to Support Affordable Homes

The Housing Finance Scheme Markup Rate has been reduced by the federal government to make home loans more affordable for Pakistani citizens.

The decision was approved on Friday after recommendations from the Economic Coordination Committee and later confirmed by the federal cabinet. The Ministry of Housing and Works issued an official notification announcing the revised policy.

Under the updated plan, the Housing Finance Scheme Markup Rate will now be fixed at 5 percent for borrowers. Earlier, some borrowers under the second tier had to pay a higher markup rate.

Officials said the aim of lowering the Housing Finance Scheme Markup Rate is to help more people buy or build homes. The scheme is designed mainly for first-time homeowners across Pakistan.

Eligibility rules remain unchanged. Applicants must be Pakistani citizens, hold a valid national identity card, and must not already own a house or apartment.

The scheme allows financing for different housing needs. These include buying a house or flat, building a home on an already owned plot, or purchasing a plot and then constructing a house.

According to the revised framework, houses up to five marla and flats or apartments up to 1,500 square feet are eligible under the scheme.

Banks and financial institutions will play a key role. Commercial banks, Islamic banks, microfinance banks, and the House Building Finance Company Limited will participate in providing loans.

The maximum loan amount has also been increased to Rs10 million. Borrowers can repay the loan over a period of up to 20 years.

The government will provide a markup subsidy for the first ten years. This subsidy helps keep the Housing Finance Scheme Markup Rate low for eligible borrowers.

Loan financing will follow a 90:10 structure. This means banks will finance 90 percent of the property value, while the borrower will provide 10 percent from personal funds.

The government will also cover up to 10 percent of the risk on the outstanding loan portfolio under a first-loss coverage mechanism.

Officials say the programme aims to finance 500,000 housing units in four years. The target includes 50,000 homes in 2025-26, 100,000 in 2026-27, 150,000 in 2027-28, and 200,000 in 2028-29.

The State Bank of Pakistan will implement the programme in partnership with the Pakistan Housing Authority-Foundation and participating banks.

The notification also confirmed that loans already issued at an 8 percent rate will be adjusted to the new Housing Finance Scheme Markup Rate of 5 percent.

Authorities have directed the Ministry of Finance, the central bank, and all participating financial institutions to take necessary steps for smooth implementation of the revised policy.