KARACHI, Nov 28: The House Building Finance Corporation (HBFC) has introduced “mortgage loan transfer facility” for its customers who have obtained loans for construction or purchase of houses or flats from local or foreign banks. HBFC chairman and CEO Zaigham Mahmood Rizvi talking to Dawn said that the facility had been approved by the corporation’s board of directors in its recent meeting held at Karachi.
“This being a normal practice in mortgage finance industry,” Zaigham said, added that hitherto it was not normal for the HBFC to entertain such sort of business.
He said that under the facility, the corporation would repay the loan liability on behalf of its customers (mortgage finance only) and book loans and assets in its own books.
Elaborating further, he said that the loan giving agency on the repayment of outstanding dues would redeem the property mortgaged with it and the corporation would simultaneously assign the said property in its favour. “This facility will initially be available to resident and non-resident Pakistanis in Karachi, Lahore, Islamabad, Rawalpindi and Faisalabad,” he added.
The HBFC chairman said that the demand of housing and housing finance, in the wake of massive shortage, was tremendous and in fact was increasing. “The country at present has an estimated backlog of about 7 million housing units. Furthermore, an additional requirement of about 0.7 million units emerges every year due to high population growth,” he added.
Over and above, he said, there was always a depletion of the existing housing stock, which takes place at a very nominal rate, adds to demand of another 300,000 to 400,000 housing units every year. “Therefore, the country needs between 1 million to 1.2 million housing units every year to cover up for the backlog and to continue meeting additional demand.”
He said that even if the corporation took one third of this demand originating from the urban areas, the housing construction industry had an investment potential of Rs350 to Rs400 billion per annum. “This offers a great challenge both to the financial institutions activity providing housing finance and to the construction material industry as well as to the town planners.”
The HBFC chief said that under its new vision the HBFC was targeting small and medium housing (SMH) finance market for low and middle income groups, which is estimated at 70 to 80 per cent of the total housing demand.
Therefore, he said that the HBFC being a pioneering institution for housing finance had to play a much bigger role in housing finance market to fully cater to the housing finance needs of a large number of potential customers. “HBFC is gearing up to meet this great challenge by offering both retail and wholesale housing solutions.”
He said that the mortgage loan transfer facility was a step forward in this direction. Mr Rizvi said that development financial institutions (DFIs) and private sector housing finance companies (HFCs) were approaching the HBFC for availing housing finance under its shariah-compliant scheme.