Housing loans on the up as more consumers desire to own property

Banks and financial institutions in Bangladesh are offering long-term housing loans to customers, creating opportunities to become owners of property.


Some institutions are even approving loans within 48 hours of receiving the customer’s application. However, most banks and financial institutions thoroughly verify the identity of the customer and the quality of his or her employer before granting loans.


As a result, the amount of default loans in this sector is less than in other sectors.


The overall size of the total housing loans portfolio of all banks was Tk85,663 crore at the end of June 2022, up from Tk77,698 crore in June 2021, an increase of Tk7964 crore or 10.25 percent in one year.


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Five banks have disbursed most of the loans in the housing sector in a year. Out of this, IFIC Bank disbursed Tk 1,812 crore, Agrani Bank Tk 1,102 crore, Islami Bank Tk1,190 crore, Sonali Bank Tk 463 crore and Janata Bank Tk 139 crore.


President of Real Estate & Housing Association of Bangladesh (REHAB) Alamgir Shamsul Alamin told UNB that the housing sector has created opportunity to become flat owner for service holders.


Lower-middle income groups of people can dream to become a flat or plot owner jointly or individually in the housing sector, which is secured and a potential safeguard of hard earned money, he said. He is also managing director of Shamsul Alamin Real Estate Limited.


“There is no accurate count of how many people have acquired flats with loan facilities,” he said.


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Around 54,000 people have bought flats with loans from the financial institution Delta Brac Housing or DBH Finance. And the number of customers who bought flats or built houses with loans from IFIC Bank is 18,500.


IFIC Bank Managing Director, Shah Alam Sarwar said, “We have achieved unprecedented success in housing loans. This financing is being done through our 1,200 branches and sub-branches.”


There is no hassle to get a loan, no extra charges. As a result, eligible customers who come to take loans take it easy, he said.


Banks are approving a maximum loan of Tk2.0 crore at the individual level to buy a flat. In this case, the ratio of bank loan and own money is 70:30. That is, to buy a flat of Tk1.0 crore, a client has to provide Tk30 lakh, and the bank finances Tk70 lakh.


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On the other hand, there is no ratio in the case of loans to non-banking financial institutions. These institutions fix this ratio themselves. The maximum interest rate for housing loans from banks is 8 percent and interest from financial institutions is 12 percent.


IFIC Bank, the first private sector bank started offering these loans at reduced interest rates. Even in early 2015, the bank was charging 11.95 percent interest against home loans, which was reduced to 9.99 percent in December 2015.


At that time the interest rate in the banking sector was more than 15 percent. The IFIC Bank has a separate housing loan facility called ‘Amar Bari’. The bank provides loans up to Tk2.0 crores for house construction and Tk35 lakhs for the construction of semi-finished buildings.


Demand has been created among the people for housing loans. As a result, more than 1000 real estate companies have been established in the country. Bangladesh House Building Finance Corporation (BHBFC) has also been established as a government initiative.


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Apart from this, specialized financial institutions have been launched to provide loan facilities for the housing sector. As a result, people are able to own a flat with a loan along with their savings. Loans are also available for house construction. Institutions in the housing sector have now reached the capital and divisional cities as well as the district level. As a result, now, housing loans in Bangladesh have reached the district level as well.


Source: United News of Bangladesh