Govt weighs auto-loan like mortgage plan to promote affordable housing

ISLAMABAD: Pakistan is considering a new housing finance model based on auto-loan systems to tackle the country’s chronic shortage of affordable homes and the lack of long-term financing options.

Federal Planning Minister Ahsan Iqbal, chairing a high-level meeting on housing policy, said the inability to access long-term mortgages is a key hurdle for the salaried class. He pointed to the widespread success of car financing in the country and questioned why similar models have not been implemented for housing.

“A home shouldn’t remain a distant dream,” Iqbal said, noting the impracticality of expecting individuals to make lump-sum payments for properties worth Rs20 to Rs30 million. He called for a government-backed mortgage scheme, offering full guarantees to banks to encourage lending.

The Planning Ministry presented a proposed framework during the meeting. Member Infrastructure Waqas Anwar outlined key financial components, while the minister confirmed that legal and regulatory reforms would be discussed with Law Minister Azam Nazeer Tarar. Separately, Punjab is preparing to roll out its own affordable housing initiative.

Iqbal urged private banks to play a proactive role, assuring them of state support. “We can create a practical housing finance system by adapting successful international models,” he said, referencing examples from countries including Singapore, Brazil, South Africa, Turkey, Bangladesh and India.

He proposed a two-tiered approach: the government would offer targeted subsidies for small homes, such as three-Marla units, while letting the banking sector address mid- to high-income housing needs through market-based lending models.

The session was attended by top officials, including Planning Secretary Awais Manzoor Sumra, State Bank Governor, PIDE Vice Chancellor Nadeem Javed, and representatives from the banking sector, PMRC, and the National Bank of Pakistan. Discussions focused on adapting global best practices to local economic conditions.

“The housing challenge isn’t just about policy. It’s an economic and social priority,” Iqbal said as he wrapped up the meeting.

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