Revolutionising House Lending for Pakistan’s Informal Sector

In Pakistan, the affordable housing challenge is vast with many bottlenecks. One of the main blockages is the lack of housing finance for people on low incomes. These people have been systematically misunderstood or excluded by mainstream mortgage lenders.

Reall have invested in affordable housing property developer, the Ansaar Management Company (AMC), who has successfully launched a pioneering new mortgage product in partnership with the semi-state-owned lending institution HBFC.

AMC and HBFC’s mortgage product is available to people in both formal and informal employment. They have de-risked lending by AMC withholding titles until the loan amount is recovered as a guarantee to HBFC. Community development officers maintain the housing site which increases property value and reassures HBFC that returns will exceed sale value in the case of customer default.

The mortgage product for people on low incomes is the first of its kind in Pakistan. With more than 60 mortgages granted so far, the initial performance has been outstanding with average repayment rates of 80% in 30 days, increasing to 99% in 90 days. This data is proving the commercial viability of lending to this market segment whilst creating opportunities to scale up, resolve the escalating urbanisation crisis and unleash the developmental and economic potential of affordable housing.

RELEVANCE TO THE CALL TO ACTION ON SUSTAINABLE URBANISATION ACROSS THE COMMONWEALTH

These examples have been chosen because of their relevance to the Call to Action, as shown by the direct quotes provided below. To view the Call to Action click here.

• “Cities and human settlements are responsible for ensuring delivery of essential services including water, sanitation, healthcare, education, public transport, and housing, upon which their citizens depend.”  
• “There is already a substantial deficit in investment in essential urban infrastructure.” 
•  “Sustainable urbanisation requires a commitment to good governance, integrated planning, effective service delivery together with fiscal and political empowerment.” 
• “Sustainable urbanisation demands collective action – genuine multi-level governance – to empower, enable and support cities and their citizens.” 

THIS EXAMPLE HAS BEEN PROVIDED BY

REALL: https://www.reall.net/