Federal govt approves Rs72 billion housing subsidy for 50,000 units

ISLAMABAD: Economic Coordination Committee (ECC) of the Cabinet approved a mark-up subsidy scheme for 50,000 housing units, with a total budget of Rs72 billion for the current fiscal year. 

The scheme is designed to assist first-time homeowners who do not own any property, enabling them to access housing finance with subsidised interest rates.

Under the scheme, eligible individuals holding valid CNICs can avail themselves of housing loans for up to 20 years. The subsidy offers a 5% fixed interest rate for loans up to Rs2 million, and an 8% rate for loans between Rs2 million and Rs3.5 million for the first 10 years. After the initial period, market rates will apply. 

The scheme covers houses up to 5 Marla or flats up to 1,360 sq. ft. with a 90:10 loan-to-value ratio, and it also eliminates processing costs and prepayment penalties.

The total budget requirement for the scheme is Rs71.98 billion over the next 20 years, with Rs61.98 billion allocated for the mark-up subsidy and Rs10 billion for risk coverage. Rs3.927 billion has been earmarked for FY 2025-26. The State Bank of Pakistan has endorsed the design of the scheme to ensure its compliance with eligibility criteria and effective outreach.

The scheme, developed in consultation with the Ministry of Finance, State Bank of Pakistan (SBP), and Ministry of Planning, Development & Special Initiatives, aims to promote affordable housing by reducing financial barriers and encouraging private-sector participation through a risk-sharing mechanism. 

The Pakistan Housing Authority Foundation (PHAF) will manage the scheme, and funds for publicity will be allocated accordingly. The Ministry of Information has proposed three potential names for the scheme: Apna Ghar — Roshan Mustaqbil, Mera Khaub — Mera Aashiyana, and Mera Ghar — Meri Jannat, to enhance public outreach.