BHBFC to increase interest rate on house building loan

The Bangladesh House Building Finance Corporation (BHBFC) has decided to increase interest rate on loans. The government has already approved a one per cent increase in all types of interest rates of the government-owned specialized financial institution in home loans. 

It is reported that the new interest rate guidelines may be issued next week.

According to relevant sources, a letter was recently sent to BHBFC from the Financial Institutions Department of the Ministry of Finance, determining the interest rate of a loan. Currently, the interest rate on all types of loans of the institution in Dhaka and Chittagong Metropolitan areas and flat loans in other areas of the country is fixed at 9 per cent. This will be increased to 10 per cent.

At the same time, the interest rate on all types of loans, except flat loans in other areas of the country except Dhaka and Chittagong Metropolitan areas, is being increased from 8 per cent to 9 per cent. 

In addition, the Ministry of Finance has allowed the interest rate on loans in Peri Urban - Upazila Sadar and adjacent Growth Centre areas to be increased from 7 per cent to 8 per cent.

BHBFC officials said that the interest rate is being increased due to the increase in the cost of financing. The 1 per cent increase in interest rate will keep the House Building Finance Corporation at the margin level. The company will not incur losses.

The main purpose of Bangladesh House Building Finance Corporation is not to make a profit. That is why the company gives loans at a much lower interest rate than banks. 

The Ministry has already approved the 1 per cent increase in interest rates on loans and the board has also approved it. Now, a notification will be issued to implement the new interest rate. Instructions on the new interest rate may be issued next week.

Bangladesh Chamber of Industries (BCI) President and Givenchy Group owner Anwar Ul Alam Chowdhury Parvez told the Daily Observer that the rising prices of goods have made the lower and middle class people feel hopeless. In this situation, the 1 per cent increase in interest rates on loans by BHBFC is adding 'a drought on the verge of death' to them.

He said, if the current situation continues, the lower and middle classes will face a crisis of instability. The government will have to come forward to sustain the lower and middle classes.

He also said, BHBFC is working to solve the housing problems of the lower and middle classes. Now if BHBFC increases the interest rate of loans, it will no longer be possible to solve their housing problems.

BHBFC will have to work to sustain the lower and middle classes.