THE demand of lowering the interest rate and keeping it at five to six percent with long-term installment facility for middle and lower middle-class people aiming to buy a flat in the urban area deserves due consideration of the authorities concerned. Discussants in a roundtable in the city recently, as reported in the press, demanded that the government should give a stimulus, and banks and financial institutions to come forward with their low-interest loan schemes for the housing sector as lower interest rates make it cheaper to borrow and it contributes to higher aggregate demand and economic growth. Many private banks have been lowering their home loan interest rate in recent time by 2%-3%, but, despite that, the interest rate is still burdensome to mid-income people that keeps them away from borrowing from the banks.Meanwhile, hundreds of ready apartments are still unsold and many realtors have become bankrupt while the prices of construction materials are spiraling up every year — all of which are acting as a barrier to prevent mid-income people from buying a flat. Housing was a thriving sector years ago, is now passing through tough times due to the country’s overall economic impasse, low investment, political uncertainty, and capital market “robbery”. Many private real estate companies are incurring huge losses or fighting hard for mere survival. Mentionable, the central bank last year announced special incentives on home loans, but there is no progress. The association of banks should take a decision to be competitive to lower their home loan interest rates so that people can realize their dream of owning a flat by borrowing from banks.As Dhaka has become overpopulated and basic amenities for standard life are hard to get, the government and realtors should built satellite towns in the outskirts of the mega cities and district towns. Besides, with the increase of population and growing demand for housing, the government should allow the building of moderate to high rise buildings in Dhaka and Chittagong, leaving more common space for parks and fields.But that to happen, the banks and other financial institutions should extend their loans towards building houses at the district and the upazila headquarters level so that people can get loans at an affordable rate. Higher disbursement of the loan at lower interest rate will be more profitable for the banks also instead of maintaining high liquidity and high reserves or idle fund. The government should also support to the private real estate companies in their housing projects by providing policy and financial support.
