A massive opportunity in sight

SBP relaxes citizens by introducing unique housing finance scheme

Ahmed Alam 05:13 PM | 28 Jan, 2021
A massive opportunity in sight

The recent housing finance scheme being offered by the State Bank of Pakistan may be a once in a lifetime chance for a common citizen to climb the housing ladder.

The intent of this scheme was to give a much-needed stimulus to the construction sector and to increase home ownership rates (part of broader plan to increase the middle class). This scheme certainly builds up to be a “win-win” for the masses, the government, and the business community.

To quote Dr Hafeez Pasha (a renowned economist) “This is the first time we have negative real interest rates since the 1950s”. Take into perspective that you are literally being paid to borrow money. The State Bank has further subsidized the cost of borrowing for mortgages so heavily that it seems untrue.

Taking my base case, people who qualify for tier 1 - a property assessed can be worth a maximum of 3.5 million PKR and must have an area of less than and equal to 125 square yards. The maximum loan amount that could be attained after the banks credit analysis of applicant is 2.8 million PKR.

Now I will list down all the benefits of this scheme. The interest rate being offered on this loan is 5 percent, the discount rate currently stands at 7 percent and the current inflation rate is around 9 percent. The borrower enjoys a positive yield of 400 basis point on the principal he/she borrowed, hence the more the amount borrowed, the better. This is a fixed rate loan with a 5 percent markup for the first 5 years and 7 percent for the next five years. This is the first time in the history of Pakistan a fixed rate loan of such a lengthy tenure is being offered and that too, at a markup lower than the discount rate. 

There is speculation in the market that the discount rate might be revised upwards to 9.25 percent by mid-year. The construction cost attributes most to the price of the housing unit in this price bracket. The construction cost of housing is not going to get cheaper any time sooner. The supply chain disruption, unparalleled demand by China, a housing boom globally in first world nations doesn’t add up well for housing.

Most commodities used for construction have gone significantly up in value most notably copper, iron, steel, and timber. Add on to that the cost of freight which has more than doubled recently, importing these raw materials now comes at a greater cost.

The demand for housing in big cities outstrips the supply and you can bet that price appreciation of this asset would be comfortably above the rate of inflation. Needless to say, this is the greatest opportunity a common man could capitalize on right now. 

Ahmed Alam
Ahmed Alam

An avid reader of books penned by the likes of notably Benjamin Graham, Jim roger, Ray Dalio and many other, the author is a university student pursuing a combined bachelor’s in Economics and Mathematics. He has a deep ...


KARACHI - Following are the foreign currency exchange rates for US Dollar, Saudi Riyal, UK Pound Sterling, U.A.E. Dirham, European Euro, and other foreign currencies in Pakistan open market on February 4, 2023 (Saturday).

Source: Forex Association of Pakistan. (last update 09:00 AM)

Currency Symbol Buying Selling
US Dollar ‎USD 279.9 283.2
Euro EUR 300.98 301.58
UK Pound Sterling GBP 337.01 337.71
U.A.E Dirham AED 75.14 75.44
Saudi Riyal SAR 73.55 73.85
Australian Dollar AUD 189 192
Bahrain Dinar BHD 712.72 720.69
Canadian Dollar CAD 200 202.2
China Yuan CNY 39.67 39.73
Danish Krone DKK 39.33 39.73
Hong Kong Dollar HKD 34.19 34.54
Indian Rupee INR 3.28 3.39
Japanese Yen JPY 2.5 2.54
Kuwaiti Dinar KWD 878 887
Malaysian Ringgit MYR 62.83 63.43
New Zealand Dollar NZD 173.25 175.25
Norwegians Krone NOK 26.79 27.09
Omani Riyal OMR 696.08 704.08
Qatari Riyal ‎QAR 73.62 74.32
Singapore Dollar SGD 204 206
Swedish Korona SEK 25.61 25.91
Swiss Franc CHF 291.69 294.19
Thai Bhat THB 8.15 8.30

KARACHI – The price of a single tola of 24-karat gold in Pakistan is Rs 205,200 on Saturday. The price of 10 grams of 24k gold was recorded at Rs175,930.

Likewise, 10 grams of 22k gold were being traded for Rs167,318 while a single tola of 22-karat gold was being sold at Rs 195,157.

Note: The gold rate in Pakistan is fluctuating according to the international market so the price is never been fixed. The below rates are provided by local gold markets and Sarafa Markets of different cities.

City Gold Silver
Lahore PKR 205,200 PKR 2,430
Karachi PKR 205,200 PKR 2,430
Islamabad PKR 205,200 PKR 2,430
Peshawar PKR 205,200 PKR 2,430
Quetta PKR 205,200 PKR 2,430
Sialkot PKR 205,200 PKR 2,430
Attock PKR 205,200 PKR 2,430
Gujranwala PKR 205,200 PKR 2,430
Jehlum PKR 205,200 PKR 2,430
Multan PKR 205,200 PKR 2,430
Bahawalpur PKR 205,200 PKR 2,430
Gujrat PKR 205,200 PKR 2,430
Nawabshah PKR 205,200 PKR 2,430
Chakwal PKR 205,200 PKR 2,430
Hyderabad PKR 205,200 PKR 2,430
Nowshehra PKR 205,200 PKR 2,430
Sargodha PKR 205,200 PKR 2,430
Faisalabad PKR 205,200 PKR 2,430
Mirpur PKR 205,200 PKR 2,430


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