SBP overhauls housing finance rules, sets 30-year maximum tenor

The State Bank of Pakistan has rewritten its Prudential Regulations for Housing Finance, according to Mettis Global, with the revised rules taking effect immediately. Banks and development finance institutions have been told to comply fully with the attached framework. The new rules replace four earlier circulars issued in 2019, 2020 and 2021.

Housing loans can now be used to buy a house or flat, build on an owned plot, purchase a plot and construct on it, extend a home, renovate, or install renewable energy systems. The maximum tenor is 30 years, while renewable energy financing runs for no more than 10 years, and the loan-to-value ceiling is 90:10. Combined monthly repayments on the housing loan and all other consumer obligations must stay below 65% of the net disposable income available to the borrower.

Loans up to Rs5 million can be secured by a lien on the property, including a Green Property Certificate from the Punjab Land Records Authority. A valuation by a PBA-panel valuator is compulsory for financing above Rs10 million, and banks must insure the unit and use standard PBA documents signed digitally with OTP or similar two-factor checks. Overdue accounts move through OAEM, Substandard, Doubtful and Loss tiers at 90 days, 180 days, one year and two years, and restructuring is limited to once in any two-year period with extensions of up to five years.