KARACHI: Mortgage Refinance Company will catalyze promotion and growth of housing finance in the country.

This was stated by Deputy Governor of State Bank Saeed Ahmed while chairing the first meeting of the Steering Committee of Mortgage Refinance Company (MRC) here on Tuesday.

“Apart from other limiting legal and operational obstacles, non-availability of long-term liquidity does not allow requisite growth in housing finance in Pakistan,” the deputy governor said.

Mr Saeed however clarified that MRC would work on with-recourse model, which will ensure that its financial health is not affected in case of default by mortgage borrowers as banks will be required to replace bad mortgages with the good ones.

The meeting was also attended by other members of the committee, including executives of MRC’s equity holder banks/DFIs, representative from Ministry of Finance, Ministry of Housing and Works, and an industry specialist from International Finance Centre (IFC).

The committee will steer the process of incorporation of MRC expeditiously in a planned manner. The steering committee will also be responsible for discussing pre-and post-incorporation formalities for the MRC.

Saeed Ahmad highlighted the fact that Pakistan is far behind in terms of mortgage finance to gross domestic product (GDP) ratio even within the region.

He emphasized on need for development of housing sector because of its forward and backward linkages with more than 40 allied industries.

He further mentioned that realizing its significance, the federal government and State Bank are taking various steps for promotion and development of housing finance.

While other key issues, including foreclosure laws, land record system, stamp duties etc., are being handled separately by the concerned quarters, the formation of MRC under public-private partnership model would help in provision of long-term funding to primary mortgage market and development of secondary market in Pakistan by adopting appropriate refinancing models.

MRC will also help in development of capital markets by issuance of corporate bonds/TFCs/sukuks.

The deputy governor set the end of December as deadline to incorporate MRC with SECP.

Published in Dawn, October 15th , 2014