KARACHI: The Economic Coordination Committee (ECC) of the Cabinet on Thursday approved revised features of a government-backed low-cost housing finance scheme, raising the loan ceiling to Rs10 million ($35,714) and introducing a subsidized five percent end-user rate in a bid to ease access to home ownership.

The move comes as Pakistan grapples with a widening housing shortage driven by rapid urbanization, population growth and high construction costs. Government estimates in recent years have put the national housing deficit in the millions of units, with low- and middle-income households facing limited access to formal mortgage financing.

“The ECC considered a summary submitted by the Ministry of Housing and Works seeking approval of revised features of the ‘Mera Ghar Mera Aashiana (MGMA)’ Mortgage Financing for Low-Cost Housing scheme,” the Finance Division said in a statement.

“After due consideration, the ECC approved the revised features of the scheme, including enhancement of the loan limit up to PKR 10 million, expansion of eligible housing size parameters, introduction of a uniform 5 percent end-user pricing, scaling targets for housing finance over a four-year horizon, continuation of implementation through the State Bank of Pakistan mechanism, and adjustment of already disbursed loans to the revised 5 percent rate to ensure uniformity,” it added.

The ECC is a key federal body that vets major financial, economic and policy proposals before formal cabinet approval.
It also approved adjustments to already disbursed loans to align them with the new five percent rate, and said subsidy payments would be aligned with actual disbursements and accommodated within annual fiscal allocations.

The Finance Division said the revised structure aims to expand access to affordable housing finance, stimulate construction activity and generate employment, while promoting sustainable home ownership through a risk-sharing and mark-up subsidy model.