Under-construction building in Dhaka city. BBN file photo

Dhaka, Bangladesh (BBN) – The central bank of Bangladesh has raised the home loan limit to BDT 20 million from BDT 12 million in view of high prices of construction materials.

As per the revised policy, the maximum per party ceiling in respect of housing finance by the banks will be BDT 20 million, according to a circular issued by the Bangladesh Bank (BB) on Tuesday.

The BB, however, kept unchanged the debt-equity ratio at 70:30, meaning clients will be allowed to receive up to 70 per cent of the total construction cost of homes from commercial banks.

On November 07, the Association of Bankers, Bangladesh (ABB) proposed revising the limit for home loan at a meeting with the central bank.

Talking to the BBN, a BB senior official said the central bank has amended our prudential regulations for consumer financing considering the price hike of construction materials for housing/real estate and in the context of growing higher middle class group, rising per capita income and increasing demand for housing.

The Real Estate & Housing Association of Bangladesh (REHAB), however, welcomed the BB’ latest move, saying that it will not only help the sector but also the country’s 250 backward linkage industries.

The housing market went on a downturn in 2012 for intermittent political instability, a bearish stock market and the government’s apathy towards providing gas connections to new buildings.