The federal government has failed to honor its commitment to resume the low-cost housing scheme, Mera Pakistan Mera Ghar disappointing millions of people that dream of owning at least one housing unit.
The government ceased the low-cost housing scheme in July and announced through the banking regulator to continue it for the customers by the end of August after necessary amendments and revisions of its features.
The government allowed banks to continue financing customers who had already received a few tranches of financing from the banks whereas it revised the profit rate of the scheme for Tier 3 and Tier 4 categories.
Commercial banks disbursed nearly Rs. 100 billion under the scheme during the period of 1.5 years whereas these banks have approved applications from a huge number of customers to Rs. 230 billion for housing finance, while applications valued at Rs. 500 billion were received.
Thousands of customers have made payments to banks and real estate agents as processing fees and token money which didn’t amount to anything apparently.
According to an estimate, Pakistan is facing a shortage of 1.2 million housing units.
The recent floods made 33 million people homeless in different districts, which further widened the deficit of Pakistan’s housing units by an additional 1 million as per estimates.
According to the bankers, there has been complete silence over the continuation of the government-supported housing finance scheme from the regulator however customers who submitted their applications are doing consistent follow-ups.
Thousands of aspirants did prolong due diligence over the purchase of housing units for many months but the scheme has been ended due to the government suspension of this scheme.
The banking regulator pushed the banks to execute an aggressive campaign for housing finance policy by setting targets but now the discontinuation of this scheme will not only cause buyers to lose trust in the government but it will also prevent banks from participating in similar schemes later on, they added.
Pakistan’s mortgage financing is already very low compared with neighboring states and countries with similar economies as the mortgage financing to GDP rate is less than 0.5 percent. Through such schemes, the economic activities are beefed up in the construction sector, which is connected with 40 allied industries.
Sources said the discontinuation subsidized financing scheme might be linked to the conditions of the International Monetary Fund which discouraged subsidies to the general public. The government’s engagement with different stakeholders during the flood might not help Pakistan unless the same schemes are introduced.
