Pakistan Banks Association (PBA) Chief Executive Officer Tawfiq Husain has said that Pakistan’s housing finance market has not yet reached a significant percentage of its gross domestic product (GDP) due to various reasons.
“The country’s mortgage-to-GDP ratio is just 0.3%, the lowest in the region, where the average for South Asian countries is 3.4%,” he said, adding that the country was facing a deficit of more than 10 million housing units, which was expected to increase 0.4 million units per year.
He made the remarks to mark the beginning of a strategic partnership between the PBA and a consortium of leading financial services and technology businesses, which would improve access to finance for low-income segments currently excluded from the traditional housing finance.
“Starting with low-cost housing finance, we hope to be able to put this model to use for other products in consumer lending,” Husain said.
Creditinfo Group, a global credit information and fintech service provider which is part of the consortium, Regional Director Samuel White said that the project would provide PBA members with the required tools to make accurate risk decisions on underserved segments of the population, which was fundamental to increase access to housing finance.
The project is being managed by the PBA Technology Working Group, comprising senior officials of Bank Alfalah, HBL and Faysal Bank as well as a senior official of the State Bank of Pakistan.
The consortium brings together credit risk analytics knowledge, alongside extensive experience in Pakistan and emerging markets globally, to develop a market-level application scorecard and income estimation model to boost financial inclusion in the country, according to a statement released on Tuesday.
The scorecard project will support the Naya Pakistan Housing Programme (NPHP), a government-backed initiative providing affordable housing units in the country that will accelerate economic activities and job opportunities following the negative impact of Covid-19.
Published in The Express Tribune, October 27th, 2021.
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