KARACHI: The World Bank has disbursed $58 million for house financing in Pakistan and the federal cabinet has approved the transfer of the fund to Pakistan Mortgage Refinance Company (PMRC).
“It ($58 million – Rs7.8 billion) is a World Bank credit line for PMRC,” PMRC Managing Director and Chief Executive Officer Mudassir Hussain Khan told media.
“The cabinet has approved the transfer of the fund. It will take around a week to 10 days before the money reaches PMRC account.” This is part of the World Bank’s $140-million credit line for the company.
PMRC is a public-private partnership established by the central bank to accelerate mortgage financing and help people build their own homes. It began commercial operations in November 2018.
The company provides comparatively cheaper loans to public and private banks and house finance companies for onward financing to the general public and builders in the country.
“We have already given Rs1.2 billion to two banks – Askari Bank and Bank Alfalah – in mortgage financing in December in anticipation of the receipt of the World Bank’s $58-million financing,” Khan said.
Besides, the company has also signed agreements – called master refinance agreements – with two other banks – The Bank of Khyber and JS Bank – for providing funding to them.
“After providing Rs1.2 billion to two banks, we still have Rs6.6 billion, which will be given to other banks for refinancing,” he pointed out.
“We have offered financing to banks at a mark-up which is half a percentage point lower than the three-year Pakistan Investment Bond’s (PIB) yield, which is 12.25% at present,” he said.
Banks can extend loans to clients at their respective mark-up rates. Banks usually avoid mortgage financing as such loans are offered for a longer period of up to 20 years.
PMRC will provide funds from this credit line to banks and house finance institutions at a two-percentage-point lower rate from the three-year PIB yield.
“We are at an advanced stage of talks with House Building Finance Corporation (HBFC) for the provision of financing for low-cost housing in Pakistan,” the PMRC MD revealed. “We may sign a master refinance agreement with HBFC in 7 to 10 days.”
