Conventional Business Model

Refinance with Recourse

To develop mortgage market in Pakistan, PMRC is providing medium to long term financing facility to Primary Mortgage Lenders (PMLs) by securing their mortgage portfolio receivables through means of portfolio assignment. PMRC’s exposure to financial institution will, at all times be over-collateralized by at least 25%. Refinancing provided by PMRC will be with recourse, i.e. PMRC will have a full recourse on financial institution (FI) in event that any of the mortgages in collateral pool is defective, FIs will replace the defective asset (receivable) with performing asset.

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.

Pre-finance Product Features

Prefinance option is available for financial institutions that do not have an existing mortgage loan portfolio however intend to enter into housing finance market. Alternate collateral i.e. PIBs, T bills etc. can be given as temporary security which will be replaced with eligible mortgage portfolio once created.

Prefinance is available in both Conventional and Islamic Shariah-compliant mode of finance. Target market for this product consists of Financial Institutions (FIs) including Banks/DFIs/HFCs/MFBs/MFIs/NBFCs.

Refinance Product Features

PMRC refinance product is based on refinance with recourse model. Objective of refinance is to provide liquidity to Primary Mortgage Lenders (PMLs) for expanding their mortgage loan portfolio. Refinance provides flexibility to generate mortgage loan portfolio on fixed rates which reduces the credit risk and provide comfort to end borrower for fixed installment for longer period.

Refinance is available in both Conventional and Islamic Shariah-compliant mode of finance. Target market for this product consists of Financial Institutions (FIs) including Banks/DFIs/HFCs/MFBs/MFIs/NBFCs.

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.
  • Prefinance option available to generate mortgage loan portfolio.
  • Specialized products for low and middle income segment with price incentive.
  • Mortgage loans portfolios of Pensioners and Govt. employees can be refinanced.
  • PMRC assistance for capacity building and product innovation.
  • Fax
  • +92(21)35633365
  • Registerd Address
  • Finance & Trade Center, 4th Floor, Block-A, Shahrah-e-Faisal, Karachi -74400, Pakistan.

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