BB expands flat purchase by raising home loan limit
Business Desk :
Bangladesh Bank has increased the maximum limit of housing loans to boost the real estate and housing sector.
According to the new guidelines, now a maximum of Tk4 crore of housing loans can be taken. This decision was implemented through a circular issued by the central bank on Tuesday.
Bangladesh Bank sources said that for a long time, the Real Estate and Housing Association of Bangladesh (Rehab) had been demanding an increase in the housing loan limit.
The loan limit was revised in the context of multiple letters from Rehab to the central bank, three to four meetings and regular communication in this regard.
Rehab president Md. Wahiduzzaman said that since the current board of directors took charge, various initiatives have been taken to activate the stagnant housing sector.
DAP and building construction rules have been issued in the form of notifications. In addition, we are grateful to the policymakers of Bangladesh Bank for increasing the housing loan limit to Tk4 crore.
He further said that earlier, due to the comparatively low housing loan limit, it became difficult for many citizens to buy a flat or house. As a result of the new decision, middle and upper-middle income people will be able to buy a flat easily.
According to the new circular, the maximum limit for providing housing loans has been set based on the default loan rate of banks.
Banks whose default loan rate is below 5per cent will be able to provide housing loans up to a maximum of Tk4 crore. If the default loan rate is between 5 per cent and 10 per cent, the maximum loan limit will be Tk3 crore and if the default loan is more than 10per cent, a maximum loan of Tk2 crore can be provided.
However, the debt-equity ratio of 70:30 in housing loans has been kept unchanged.
At the same time, instructions have been given to properly verify the income and repayment capacity of the borrower.
Experts believe that increasing the housing loan limit will increase demand in the real estate sector. Individuals and families will be encouraged to buy relatively high-priced or good-location flats. This will allow developers to increase investment in new projects, which will boost the entire housing sector.
At the same time, increasing credit flow to long-term and large projects will create employment in the construction sector. In addition, those concerned believe that there will be a positive impact on the construction material production sector including rods and cement.
Overall, this decision of Bangladesh Bank in view of the demands of Rehab has brought relief to the housing sector. It is expected that this will be helpful for both buyers and developers and that new vitality can return to the housing sector.
