Pakistan housing finance rises as govt pushes broader access to credit

Pakistan is accelerating reforms to expand access to affordable financing, with housing, agriculture and small business lending gaining momentum since the new fiscal year began, Finance Minister Muhammad Aurangzeb said on Tuesday. He chaired a meeting of the Access to Finance Steering Committee in Islamabad to review progress across housing, agriculture, SMEs, exports, IT and renewable energy.

How much has Pakistan's housing finance grown?

Total outstanding housing finance in Pakistan rose to about Rs307 billion by mid-August, up from Rs294 billion at the end of June. Under the Wazir-e-Azam Apna Ghar Program, applications climbed 52% to nearly 139,000, while approvals rose 84% to more than 46,000, official data shows.

Approved financing under the program nearly doubled to Rs279 billion from Rs144 billion. Loans disbursed rose 59% to more than 7,600, totaling over Rs38 billion. The government said channeling greater financial-sector capacity toward home ownership, enterprise creation and exports would translate macroeconomic stability into stronger, private sector-led growth.

What reforms are making mortgage lending easier in Pakistan?

The State Bank of Pakistan has revised housing finance rules to allow a 90% loan-to-value ratio and a 65% debt-burden ratio. New models will assess informal incomes, alongside simplified property valuation, documentation, digital processes and longer repayment periods. Officials also cited the passage of the Financial Institutions (Recovery of Finances) (Amendment) Act, 2026, known as FIRA, as a major legal reform expected to boost lender confidence.

The committee said the construction industry must increase the supply of quality, affordable homes as access to financing improves. Greater housing activity could boost construction, cement and building materials, allied industries, small businesses and employment.

How are agriculture and small business loans performing?

The number of agriculture borrowers increased by about 115,000 since June, reaching 3.37 million by mid-August, while agricultural financing remained around Rs1.26 trillion. Under the Zarkhez-e Asaan Zarai Qarza program, more than 58,000 farmers have registered for uncollateralized loans aimed mainly at financing agricultural inputs. Bank approvals rose about 12% since June to nearly 16,700, with approved financing limits exceeding Rs7.2 billion, and nearly 5,000 loans have been disbursed, an increase of about 13%.

Formal financing for small and medium-sized enterprises stood at about Rs1.05 trillion, covering roughly 330,000 businesses. A credit-scoring pilot involving 13 banks is testing alternative methods of assessing business cash flows to reduce reliance on traditional collateral. The government aims to raise agriculture and SME financing to Rs1.5 trillion by June 2027 and Rs2 trillion by June 2028, while substantially expanding their borrower bases.

How is Pakistan boosting export financing?

The committee linked access to finance more closely with the government's export-led growth strategy, reviewing enhanced financing and refinancing support for exporters and SMEs, including working capital and long-term investment loans. It welcomed the Performance Based Rebate on Incremental Exports, which took effect July 1: exporters achieving growth of up to 10% qualify for a 1% rebate, while those recording growth above 10% qualify for a 2% rebate.

The government is particularly focused on helping export-oriented SMEs obtain bank financing through facilities administered by the Export-Import Bank of Pakistan. Aurangzeb said SME financing, export refinancing, long-term investment loans and performance-based incentives need to work together so businesses can expand production and generate more exports and foreign-exchange earnings.

What progress has Pakistan made on electric vehicle and digital financing?

The committee also reviewed progress under the Pakistan Accelerated Vehicle Electrification program. More than 83,000 applications had been received by mid-August, with about 15,800 approved and nearly 4,000 loans disbursed. Since June, approvals increased about 24% and disbursements 34%, while electric vehicles delivered more than tripled from 471 to over 1,500.

Officials also reviewed the prime minister's online digital housing portal and called for greater coordination among institutions to simplify access to financing. Aurangzeb directed officials to monitor banks weekly and monthly on financing, borrower growth, approvals and disbursements, and said implementation problems should be brought to the committee with recommendations for quick resolution. "Access to finance is ultimately about expanding access to economic opportunity," he said, calling for continued coordination among the Finance Division, State Bank of Pakistan, Securities and Exchange Commission of Pakistan, Pakistan Banks' Association and other stakeholders to speed up implementation.