Personal home loans issued by banks and financial institutions (BFIs) increased only marginally amid a slowdown in real estate transactions, despite Nepal Rastra Bank (NRB) easing policies to encourage credit flow in this category for the current fiscal year.
In this year’s monetary policy, NRB raised the loan ceiling for residential home construction and purchase from Rs 20 million to Rs 30 million. Likewise, the loan-to-value ratio for home loans has been set at up to 80 percent.
According to NRB records, BFIs issued home loans worth Rs 9.29 billion during the first three months of FY 2025/26—an increase of 6.21 percent compared to the same period last fiscal year. By the end of FY 2024/25, total home loans issued stood at Rs 332 billion, which rose to Rs 341.35 billion by mid-October this year.
BFIs currently face excess liquidity due to the ongoing economic slowdown, particularly the decline in real estate activity. With liquidity reaching Rs 1.1 trillion and base interest rates falling to as low as four percent per annum, banks report that the increase in lending is driven more by low borrowing costs than economic recovery.
In the past year alone, BFIs invested Rs 21.77 billion in home loans. As of mid-October last year, total investment under this category was Rs 319.58 billion.
Among individual commercial banks, NIC Asia Bank leads with personal home loans totaling Rs 44.48 billion, although the bank recorded a 20.62 percent decline between mid-July and mid-October. Global IME Bank follows with Rs 43.95 billion, while the state-owned Rastriya Banijya Bank has issued Rs 31.20 billion in personal home loans.
