Pre-finance Product Features

  • Discounted pricing for low and middle income group
  • Pre-finance period of ranging 1 – 2 years
  • Principal repayment at maturity of pre-finance loan
  • Conversion of portfolio up to 20 years
  • Waiver from general provisioning on portfolio

Refinance Product Features

  • Refinance available against existing eligible housing finance portfolio
  • Medium and long-term loan
  • Refinance loan on fixed rates
  • Servicing of loan by Primary Mortgage Lenders
  • Waiver of general provisioning on portfolio refinance from PMRC

Conventional Business Model

Purpose

To provide liquidity to Primary Mortgage Lenders to generate more mortgages and to promote the housing sector.

Target Market

  • Banks/DFIs having Mortgage Loan Portfolios
  • Housing Finance Companies registered with SECP

Eligibility Criteria for Primary Mortgage Lenders

  • Licensed and supervised by SBP/ SECP and is engaged in the business of housing finance;
  • Has a long-term credit rating of at least “A” issued by one or more recognized credit rating agencies licensed by the SECP; and
  • Has unqualified audited Financial Statements for the most recent financial year, except for an emphasis of matter paragraph in the Auditor’s Report relating to the Customer’s minimum capital requirement as allowed by SBP.

Product Features

  • Refinance loan against existing eligible housing finance portfolio
  • Medium and long-term loan
  • Refinance loan on fixed rates
  • Servicing of loan by Primary Mortgage Lenders
  • Principal repayment at maturity of loan

Advantages of Refinancing with PMRC

  • Reduces maturity mismatch risk
  • Reduces liquidity risk
  • Innovate and offer fixed rate mortgages (advantageous to banks and borrowers)
  • Fixed rate mortgages increase affordability and reduces incidence of default by borrowers
  • Enables banks to diversify their sources of funds

Islamic Business Model

SHARIAH STRUCTURE OF ISLAMIC BUSINESS PRODUCT OF PMRC

PRODUCT STRUCTURE:

  • Islamic Mortgage Business of PMRC is based on Shirka-tul-‘Aqd.

SHIRKAT-UL-AQD (BUSINESS PARTNERSHIP):

  • Shirkat-ul-‘Aqd (Business Partnership) means an agreement between two or more parties to combine their assets, labour or liabilities for the purpose of making profits and bearing loss (if any).

MUSHARAKA MORTGAGE POOL CREATION:

  • PMRC shall purchase mortgage assets at agreed cut-off rate.
  • Customer shall create special pool and comingle his share.
  • Risk and Reward of these assets will be shared proportionately.
  • The customer shall manage this arrangement through equity pool rather than using the general pool.

PROFIT & LOSS SHARING MECHANISM

  • The profit-sharing ratio will be pro-rata or any other ratio agreed at the time of contract.
  • Loss will be shared as per their proportionate sharing (If any).
  • In addition, profit realized more than the Desired Rate will be given to client as incentive as reflected in below chart.

Key Benefits of PMRC

  • Reduced Maturity mismatch – Improved ALM.
  • Reduced Market risk – Fixed rate Loans.
  • Stable source of funding.
  • Reduced Credit Risk- Improved Affordability of Consumer.
  • Borrowings from PMRC are exempted from maintenance/calculation of CRR/SLR
  • Exemption in general provisioning for portfolio refinancing loans from PMRC.
  • Reduced Risk Weightage for PMRC refinanced mortgages.
  • Exemption from real estate lending limits – more exposure for Housing Finance.
  • PMRC’s funding will increase housing finance portfolio of banks thereby creating long term funding source.
  • Banks can cross sell different products to new customers to increase profitability.
  • Leveraging existing portfolio for additional lending.
  • Fax
  • +92(21)35633365
  • Registerd Address
  • Finance & Trade Center, 4th Floor, Block-A, Shahrah-e-Faisal, Karachi -74400, Pakistan.

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