Housing loans represent relatively secured assets

The country's home loan sector continues to expand steadily, supported by rapid urbanisation, rising demand for residential housing and the gradual growth of middle-income households. Both banks and non-bank financial institutions (NBFIs) remain active in the segment, although commercial banks dominate due to their lower cost of funds and wider branch networks.
In recent years, tighter regulatory oversight by Bangladesh Bank has strengthened underwriting standards, including loan-to-value caps and debt-to-income requirements, improving overall portfolio quality.
However, rising construction costs and comparatively higher interest rates pose challenges for borrowers.
The observations came from a leading lending bank -- The Midland Bank PLC.
Despite these pressures, housing finance remains a strategic area for sustainable retail growth, provided lenders maintain prudent risk management and strong credit discipline, said Mr. Imtiaz U. Ahmed, Managing Director and Chief Executive Officer (CEO) of Midland Bank PLC, in an exclusive interview with the Financial Express (FE).
According to industry observations, salaried professionals account for the largest share of home loan borrowers, particularly employees of government institutions, banks, multinational companies, large corporates and reputable educational institutions.
Self-employed professionals -- including doctors, engineers, architects and established business owners -- also represent a significant portion of the housing finance portfolio. Landlords with stable rental income streams are increasingly utilising home loans, particularly for property development and renovation.
These borrower groups typically exhibit stable income patterns and verifiable financial records, making them well suited for long-term financing. As housing demand expands beyond major cities, participation from entrepreneurs and mid-level professionals is also rising gradually.
The CEO said: "Home loan portfolios generally show more stable repayment performance than unsecured retail lending, largely due to their secured nature and the long-term commitment associated with property ownership. Most borrowers prioritise timely installment payments to safeguard their residential assets".
Financial institutions closely monitor repayment behaviour through structured collection systems. Follow-up begins as soon as instalments become overdue, with reminder calls, written notices, and recovery measures aimed at regularising accounts while preserving customer relationships, the CEO said.
"Housing finance offers significant benefits to borrowers by enabling property ownership without requiring full upfront payment, supporting long-term financial planning and asset accumulation. The instalment-based structure allows borrowers to build equity over time while benefiting from potential property price appreciation".
For lenders, housing loans represent relatively secure assets, backed by tangible collateral and supported by regulatory safeguards.
He went on: "Nonetheless, risks remain. Borrowers may face financial strain if incomes decline or interest rates rise, affecting repayment capacity. For lenders, key risks include property price volatility, legal disputes over ownership and borrower default".
These risks are mitigated through careful credit assessment, insurance coverage and continuous monitoring. When managed effectively, housing finance remains a mutually beneficial segment that supports economic growth, promotes home ownership and strengthens long-term financial stability. The Midland Bank PLC CEO Mr. Ahmed, added.