SBP eases condition to avail housing loan on the personal guarantee

KARACHI: The State Bank of Pakistan (SBP) on Monday eased the condition for availing loan for housing loan by allowing personal guarantee.
The SBP said that currently applicants face difficulties in obtaining housing finance, especially for low-cost housing, as banks are reluctant to take the risk of the house not being completed or documentation completion.
The completion of the housing unit and mortgage creation takes time. In order to address this issue for applicants and banks, the SBP has allowed acceptance of a third party guarantee for this period up to a maximum of one year.
With the aim to facilitate the banks in extending low cost housing finance, SBP has allowed them to accept personal guarantee of third party until the housing unit is completed and the mortgage is perfected.
The guarantee will remain valid for a maximum period of one year. This step will help promote home ownership of potential borrowers wishing to avail housing finance under Government Markup Subsidy Scheme issued by State Bank of Pakistan on October 12, 2020.
Third party guarantee will cover the period from the disbursement of loan to the time when construction is completed and risk coverage becomes available by Pakistan Mortgage Refinance Company.
Acceptance of third party personal guarantee will provide additional comfort to banks for extending low cost housing finance, an area in which banks have keen interest for its business potential.
It is expected that with this move, banks will increase their efforts to ensure that the benefits of the mark-up subsidy scheme reach marginalised segments of the society who currently do not own a house.
Meanwhile, the inflow of workers’ remittances into the country witnessed 19 percent increase in January 2021, as compared to the same month of the previous year, said the State Bank of Pakistan (SBP) on Monday.
The remittances remained above $2 billion for the 8th straight month as during the corresponding month, the inflow was recorded at $2.3 billion as compared to the inflow of $1.907 billion in January 2020. On average, remittances surged by 24 percent during July-January (2020-21) from $13.28 billion in July-Jan (2019-20) to $16.476 billion in the same period of the current fiscal year, according to data released by the SBP.
The country wise detail shows that the highest inflows came from Saudi Arabia as Pakistan received $553 million during the month as compared to $531.6 million in January 2020 and $624 million in December 2020.
From the UAE, the country received $492.5 million in January 2021 against the inflows worth $463.5 million in the same month of last year.
The overseas Pakistanis living in the USA dispatched $203.2 million as compared to $148.8 million in January last year, whereas from the UK, the workers’ remittances were recorded at $303 million against the $201 million.
Similarly, the cash inflow from European Union countries jumped from $142 million in January 2020 to $228.8 million in January 2021.
From other GCC countries including Bahrain, Kuwait, Qatar and Oman, the inflows also increased to $271.2 million as compared to $260 million in January 2020.
From Australia the workers’ remittances inflow jumped by about around 89 percent as it increased from $27.4 million to $51.9 million in the corresponding month of current year.
Likewise, workers’ remittances in the corresponding month from Malaysia, Norway, Switzerland, Canada, and Japan stood at $14.9 million, $8.5 million, $4.3 million, $47.6 million, and $6.2 million, respectively. – TLTP