make housing finance accessible and affordable


Mortgage industry in any country supports more than 40 allied industries such as steel, cement, chemicals, glass and ceramics, transport banks. All these industries combined contribute more than 30% of the GDP.

When these industries grow, they not only increase the GDP, but consequently increase the capacity of the workforce, which is another stimulus for a growing economy.

In high income economies, mortgages are widely available and commonly used for housing finance by consumers. Many low- and lower-middle-income countries only register a few thousand loans or a few hundred in some cases.

For example, the mortgage-to-GDP ratio in Bangladesh is over 5%, while in India it is over 11%.

In Pakistan, this ratio is barely 0.3 percent, which is significantly lower than the South Asian average of 3.4%. Pakistan is thus facing a deficit of more than 10 million housing units, which is increasing by nearly 0.4 million units per year.

Read more: Role of banks in mortgage financing

The supply of housing, especially for low-income groups in the country, remains negligible despite strong demand. According to a recent IFC housing market study in Pakistan, only 1% of the housing supply goes to 68% of the population earning a monthly income of up to US $ 188, while around 56 % of housing units cater to 12% of the population earning a monthly income above $ 625 and most financial institutions are only limited to Tier 1 cities for their mortgage finance products.

Other factors contributing to the low mortgage-to-GDP ratio are high house prices due to urbanization, rising construction costs, unavailability of fixed-rate mortgage financing, ineffective foreclosure laws, and problems with foreclosure. land titles that require financial institutions to lend selectively.

In order to overcome these challenges, the government of Pakistan, especially in recent years, has taken various measures; one was to create a mortgage refinancing company to deal with the funding constraint that was hampering the growth of the primary mortgage market.

The Pakistan Mortgage Refinance Company (PMRC) was therefore established as a mortgage liquidity mechanism by the State Bank of Pakistan to address the long-term funding constraint of the banking sector.

PMRC was formed in 2015 and started operations in 2018, over the years PMRC has acted as a catalyst in the housing finance industry, through which it provides long term financing to primary mortgage lenders at subsidized rates. and fixed, enabling them to launch mortgage products for end consumers, particularly in the low and middle income segment.

Read more: President of General Anwar Ali Hyder (NAPHDA): Unboxing the low cost housing initiative

PMRC provides both refinancing and pre-financing products, enabling major mortgage lenders to offer affordable and accessible mortgage financing solutions to their clients. Primary Mortgage Lenders (PMLs) typically finance their short-term assets

deposits and prefer to keep their debts short term, which leads to mortgage finance loans for 10 to 12 years only.

While providing long-term funding, PMRC helps PMLs reduce their asset-liability asymmetry. The market sees mortgages with terms of up to 20 years. These longer-term loans reduce monthly payments, thus improving the affordability of mortgages for end borrowers.

In its offers, PMRC offers various financing products under both conventional and Islamic financing methods. He has already partnered with eighteen financial institutions, including several commercial banks, MFB (Micro Finance Banks), MFI (Micro Finance Institutions), DFI (Development Financial Institutions) and Non-Banking Finance Company (NBFC), which are engaged in housing finance.

Read more: JS Bank and PMRC sign agreement to promote affordable housing finance

The WCRP has ensured that its fundraising activities are not only concentrated in one area, but extend across Pakistan, covering all provinces from the northern regions of Gilgit Baltistan to Baluchistan and the Sindh deserts.


Increasing diversity in ownership through the participation of women is encouraged by pricing incentives made available to PMLs. During these years, the PMRC-funded mortgage portfolio created 26 percent female ownership participation.

He also encouraged funding for increased home ownership in districts and rural communities through partner institutions such as Thardeep Microfinance which introduced a new culture of real estate finance in these areas. .

These efforts resulted in PMRC giving it an “AAA” Entity Rating and being nominated for the Most Innovative and Contributing Non-Bank Entity at the Pakistan Banking Awards. PMRC is now considered the fastest growing DFI in the country.

With the mortgage market growing from PKR 107 billion in June 2019 to PKR 118 billion in June 2021, PMRC’s mortgage refinancing increased by PKR 13 billion, reaching 17% of the country’s total mortgage financing in just three years of functioning.

In addition to providing housing finance facilities, PMRC has developed a credit guarantee product specifically for low cost housing. This product is offered through a unique trust established by the Government of Pakistan, where PMRC acts as administrator and is directly funded by the World Bank Group. The trust provides up to 40% first loss credit guarantee to major mortgage lenders.

The guarantee allows them to partially reduce their credit risk arising from social housing portfolios and thus encourages them to lend in this segment. To date, PMRC has signed credit guarantee agreements with 13 primary mortgage lenders.

The PMRC is also committed to assisting PMLs in the standardization of funding documents, product development and the provision of training. The company is recognized as a knowledge partner at the International Mortgage Market Association (ISMMA) and Asian Secondary Mortgage Market Association (ASMMA) forums. PMRC has also provided product development advice to mortgage refinancing companies in Kenya, Saudi Arabia, Tajikistan and Uzbekistan.

Read more: Pakistan’s failure to promote low-cost housing? A historical overview

PMRC is also an active issuer in the capital market and has issued various debt instruments, both conventional (term finance certificates) and Islamic (Sukuks). Since FY20, PMRC has issued a total of 7 fixed income instruments worth PKR 12 billion. It introduced the first sukuk of its kind with a unique structure based on a mortgage pool. It remains the only DFI in Pakistan to issue medium and long term fixed rate debt instruments to support the development of the capital market.

Pakistan was one of the first countries to adopt Goal 11 of the Sustainable Development Goals (SDGs) on building resilient communities. The PMRC strives to ensure access to adequate, safe and affordable housing. It aims to continue to provide the necessary impetus for the growth of the mortgage market by bringing in new asset classes supporting green housing for higher social and environmental standards and by encouraging the market to innovate with low-cost housing solutions. cost, better and efficient, digitally compatible.

PMRC remains committed to increasing accessibility and affordability for financial inclusion and greater home ownership in Pakistan.


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