Pakistan’s top economic body increases loan limit for low-cost housing to PKR 10M

Pakistan’s top economic body has approved changes to the financing scheme for low cost housing to revive the country’s construction sector and expand home ownership.

The Economic Coordination Committee of the Cabinet (ECC) met on Friday under the chairmanship of the Finance Minister Muhammad Aurangzeb.

The ECC considered a summary submitted by the Ministry of Housing and Works seeking approval of revised features of the “Mera Ghar Mera Aashiana (MGMA)” — Mortgage Financing for Low-Cost Housing scheme.

The committee was informed that since its launch, the scheme has generated strong public response, with over 10,594 loan applications received and disbursements underway.

After due consideration, the ECC approved the revised features of the scheme, including enhancement of the loan limit up to PKR 10 million, expansion of eligible housing size parameters, introduction of a uniform 5% end-user pricing, scaling targets for housing finance over a four-year horizon, continuation of implementation through the State Bank of Pakistan mechanism, and adjustment of already disbursed loans to the revised 5% rate to ensure uniformity.

The committee emphasized that subsidy payments will be aligned with actual disbursements and accommodated within annual fiscal allocations.

The revised framework is aimed at expanding access to affordable housing finance, stimulating construction activity, generating employment, and promoting sustainable home ownership through a balanced risk-sharing and mark-up subsidy model.

The ECC also considered and approved a summary submitted by the Ministry of Interior & Narcotics Control regarding the transfer of PKR 7.29 million as a technical supplementary grant for a project aimed at strengthening agricultural productivity in rain-fed regions.

The committee also approved a summary submitted by the Railways Division for the provision of a grant of PKR 6.61 billion for the Thar Coal Rail Connectivity Project as budgetary cover.

The project will facilitate the transportation of indigenous coal to power plants and industrial sectors, thereby supporting energy security and reducing reliance on imported fuels.