News
Only 19% of Approved Affordable Housing Finance Reaches Homebuyers in Pakistan
By Mariam Khan
Real Estate Analyst
3 min read
Finance Minister Muhammad Aurangzeb has said that Pakistan's banking system has approved more than Rs400 billion in affordable housing financing, but only around Rs76 billion, roughly 19 percent, has actually been disbursed to first-time homebuyers. He gave the figures while addressing the Pakistan Microfinance Network's annual conference. Official statements are published by the Ministry of Finance.
Why the Gap Between Approval and Disbursement Matters
An approval is a commitment in principle, and a disbursement is money that reaches the borrower or the seller. Rs76 billion against more than Rs400 billion means that about four-fifths of the approved amount has not yet been paid out (our own calculation from the minister's figures). The reports do not explain why. Possible causes such as incomplete paperwork, delays in property verification or buyers dropping out are not mentioned, and we have not assumed any of them.
Why "More Than Rs400bn" Makes the Percentage Approximate
The minister said more than Rs400 billion was approved, so 19 percent is a rounded figure that would be slightly lower if the approved total is above Rs400 billion. The reports do not say which schemes or which banks are included, nor over what period the approvals were made.
Why This Tests the New Mortgage Target
The disclosure came a day after the government's framework to raise mortgage finance from below 0.5 percent to 5 percent of GDP by 2035. The framework is a set of goals, and a gap between approved and disbursed funds is one of the practical obstacles to meeting them. Faster disbursement would be necessary for housing finance reforms to translate into actual residential demand and construction activity.
Why This Fits the Wider Housing Finance Picture
We have followed the supply and demand sides of this issue in our reports on Pakistan's cash-driven housing market, talks with the IFC on private capital for affordable housing and the SECP's proposal to raise the housing loan ceiling to Rs5 million. Raising limits and approving more loans matter less if the money does not reach buyers.
What This Means for First-Time Buyers, Developers and Banks
First-time buyers who have been approved for affordable housing finance should ask their bank where their application stands and which documents are outstanding, since many approvals have not yet been disbursed. Developers selling to such buyers should not count approvals as received payments. Banks and policymakers will be judged on whether the disbursed share rises in coming months. The signals to watch are further disclosures of approvals and disbursements, and any measures to speed up payment.