By Muskan Naveed ISLAMABAD, Mar. 22 (INP-WealthPK): The State Bank of Pakistan (SBP) has revised the mark-up rates for the government’s tier-1 house financing scheme in order to incentivize the consumers. The housing and construction sector has been given priority by the incumbent government because of various horizontals and verticals the industry boosts along with itself. The government formalized its efforts through its Markup Subsidy Scheme – which was launched in October 2020. The initiative is also referred to Mera Pakistan Mera Ghar. The government has collaborated with the central bank along with Naya Pakistan Housing and Development Authority (NAPHDA). The financing scheme has four tiers with the maximum loan size of Rs10 million under the fourth tier. The Tier-1 loans range from Rs2.7 million to Rs6.0 million. The consumer rate for the second tier was previously 5% for the first five years followed by 7% for subsequent five years. For loan tenor of over 10 years, bank pricing – which is KIBOR plus 250 BPS – is applicable. The State Bank has revised the mark-up rates downwards in accordance with stakeholders’ feedback. The current mark-up on tier-1 loans is 2% for the first five years and 4% for the next five years. As opposed to the previous conditionalities, Tier-2 loans with tenor from 11 to 15 years have a rate of 5%. Any loans with tenor exceeding 15 years will have bank pricing applicable to it. The bank pricing of KIBOR plus 250 basis points has not been changed. The mark-up rates for all other tiers are also to be maintained without any changes. Furthermore, the central bank has also asked all banks and development finance institutions to apply the revised rates with immediate effect. Due to State Bank’s efforts, house and construction financing by banks had also recorded a phenomenal surge of 85% during the previous calendar year, 2021. The central bank’s data reveals an uptrend in the ratio of amount disbursed over the curse of the project’s life so far. The latest available data shows that the cumulative amount requested in December 2021 was Rs276 billion while the amount approved was Rs117 billion – out of the approved amount, Rs38 billion has been disbursed during the same month.   The recent passage of the State Bank Act (Amendment) 2021 has led to a debate regarding the SBP’s house financing scheme along with other development finance initiatives, as the International Monetary Fund (IMF) has mandated the bank to stop such initiatives. However, ministerial officials have been adamant on the necessity of State Bank’s role in refinancing schemes with leading economists like Sajid Amin of the view that the SBP is more likely to continue the activities. The recent revision by the State Bank also indicates that the monetary authority is going to continue the house financing scheme in order to boost the Pakistani economy.