By Moaaz Manzoor

Pakistan’s limited mortgage financing system may pose a challenge to the government’s plan of financing 500,000 housing units under the Prime Minister Apna Ghar Programme (PM-AGP), according to official documents available with Wealth Pakistan. The documents state that Pakistan’s housing mortgage sector remains significantly underdeveloped, with the mortgage-to-GDP ratio standing at just 0.3%, reflecting the limited reach of housing finance in the country.

According to the documents, banks’ total housing finance portfolio stood at Rs233.81 billion as of September 2025, serving only 64,288 borrowers nationwide. The documents compare Pakistan’s mortgage market with those of other countries, noting that Malaysia’s mortgage-to-GDP ratio stands at 44.4%, Germany’s at 34.2%, and the United States’ at 15.3%.

Against this backdrop, the federal government plans to facilitate financing for 500,000 housing units over the next four years through the PM Apna Ghar Programme, which aims to expand homeownership among low- and middle-income groups through subsidised financing. Under the revised structure of the scheme, eligible borrowers can obtain financing of up to Rs10 million for the purchase or construction of houses, flats, or plots, with a repayment tenure of 20 years and a subsidised customer rate of 5%.

However, the documents note that achieving the required scale of mortgage lending would depend on greater participation by financial institutions and stronger legal protections for banks involved in long-term housing finance. In this regard, the documents emphasise the importance of an effective foreclosure and recovery framework, describing it as fundamental for a sustainable housing finance system.

According to the documents, a strong foreclosure regime helps reduce credit risk and recovery time for banks, minimises non-performing loans (NPLs) and legal delays, and creates a more secure lending environment for mortgage expansion. The documents further state that stronger recovery mechanisms would support risk mitigation for subsidised lending and encourage banks to increase loan disbursements under the PM-AGP.

To achieve the overall target, the government has set phased annual goals of financing 50,000 housing units in FY26, 100,000 units in FY27, 150,000 units in FY28, and 200,000 units in FY29. The documents conclude that supportive legal reforms and broader banking-sector participation would remain important for the long-term expansion of housing finance in Pakistan.

Credit: INP-WealthPk