SAJIBUR RAHMAN
Bangladesh's housing loan stock recorded a modest decline in the last quarter (Q4) of 2025, reflecting a slight easing of outstanding borrowing in the sector.
According to available data, the total housing loans stood at around Tk 1.25 trillion in December 2025, down from approximately Tk 1.27 trillion in September 2025, marking a contraction of about Tk 27 billion over the three-month period.
The decline in the volume of housing loan was attributed to either higher loan repayments and slower disbursement of new housing credit, or a combination of both during the quarter.
Despite such a downward trend, the housing loan portfolio maintained at a historically high level, indicating sustained demand for residential financing in Bangladesh's property market.
The country's housing loan portfolio expanded to Tk 1.26 trillion in 2024, a marginal yet steady increase from that of Tk 1.24 trillion in 2023. The growth continued to be spearheaded by private commercial banks (PCBs), which maintain a dominant stronghold over the mortgage and real estate credit market.
Financial sector observers note that housing credit trends are influenced by interest rate movements, inflationary pressures, and liquidity conditions in the banking system. Recent tightening monetary and cautious lending practices migh have also contributed to such a downtrend.
However, the long-term trajectory of housing finance in Bangladesh continued to show gradual expansion, driven by urbanisation, rising middle-class incomes, and growing demand for home ownership.
About the mixed trends in the housing financing for developers and contractors, insiders said housing (commercial) loans for developers and contractors stood at Tk 382.03 billion in December 2025, down from Tk 386.01 billion in September 2025.
This represents a decline of about Tk 3.98 billion (1.03 percent), indicating a mild slowdown in developer-level financing.
The trend might reflect cautious lending by banks, project completion cycles, or rising financing costs affecting new construction activity.
About the urban residential housing (Individuals) segment, they said urban housing loans for individuals fell sharply to Tk 288.34 billion in December 2025 compared to Tk 316.66 billion in September 2025.
It marks a decline of about Tk 28.31 billion (8.94 per cent), highlighting significant pressure in urban housing finance.
The sector insiders attribute the downward trend to higher interest rates, rising property prices, and tighter lending policies, which might have dampened borrowing demand in major cities.
Regarding the rural residential housing segment, they said the rural housing loans marked a significant rise to Tk 41.38 billion in December 2025 over that of Tk 37.09 billion in September 2025. It reflects an increase of around Tk 4.29 billion (11.57 per cent), indicating a greater access to housing finance outside urban centres.
The rise is linked to financial inclusion initiatives and growing demand for rural housing improvements.
About the state of commercial housing and housing developers, experts highlighted the mixed trend in housing credit reflects broader macroeconomic adjustments in the financial sector.
"...the mixed trend in housing credit reflects broader macroeconomic adjustments in the financial sector," said Dr Masrur Reaz, Chairman and CEO of Policy Exchange Bangladesh,
He further said such a downward trend in the urban housing loans indicates tighter credit conditions and affordability pressures in major cities, where rising property prices and higher interest rates have increased borrowing costs.
"At the same time, the steady growth in rural housing finance suggests that financial inclusion efforts are gradually expanding beyond urban centres, which is a positive structural shift," said the economist.
Dr Reaz also said the relative stability in commercial housing loans shows that developer activity has slowed but not collapsed, and is being shaped by cautious lending practices and ongoing project cycles.
He, however, cautioned that sustained pressure in urban housing finance could weaken real estate demand if interest rates remain elevated for a prolonged period.
He also emphasised that a greater access to long-term, affordable housing finance would be critical to maintaining balance in both urban and rural housing markets.
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