Housing finance rebounds sharply while auto loans and credit card lending record strong double-digit growth
ISLAMABAD: Consumer financing in Pakistan recorded robust growth during the first nine months (July–March) of FY2025-26, driven by rising demand for housing finance, auto loans and credit cards, according to the Economic Survey of Pakistan 2025-26.
Based on data from the State Bank of Pakistan (SBP), the survey showed that total consumer financing flows increased to Rs146.2 billion during July–March FY2025-26, more than doubling from Rs71.4 billion in the corresponding period of the previous fiscal year.
On a stock basis, overall consumer financing expanded by 16.0% during FY2025-26, compared with 8.9% growth a year earlier, reflecting stronger consumer confidence and increased lending by commercial banks.
Housing finance posts strong recovery
Housing finance staged a notable turnaround during the review period.
Net financing for house building reached Rs20.5 billion during July–March FY2025-26, compared with a contraction of Rs4.1 billion in the same period of FY2024-25.
The outstanding stock of housing loans also improved, growing by 9.9% after recording a 2.0% decline in the previous fiscal year.
The recovery suggests renewed activity in the housing sector as improving macroeconomic conditions encouraged greater borrowing.
Auto financing leads consumer lending
Auto financing remained the strongest contributor to consumer lending growth.
Banks disbursed Rs68.7 billion in vehicle financing during July–March FY2025-26, compared with Rs26.9 billion in the corresponding period of the previous year.
The outstanding stock of auto loans expanded by 24.9%, significantly higher than the 11.7% growth recorded in FY2024-25, highlighting strong demand for vehicle purchases.
Credit card usage continues to rise
Credit card financing also witnessed substantial expansion during the period.
Net flows increased to Rs39.0 billion, up from Rs18.3 billion in the same period a year earlier.
Outstanding credit card balances grew by 24.6%, compared with 15.0% growth in FY2024-25, reflecting increased consumer spending and wider use of retail banking services.
Consumer durables and personal loans show mixed trends
Financing for consumer durables remained subdued despite the broader improvement in retail lending.
Banks disbursed only Rs0.5 billion for consumer durable purchases during July–March FY2025-26, down from Rs1.3 billion in the corresponding period of FY2024-25.
Growth in outstanding financing for consumer durables also slowed to 5.6%, compared with 17.5% in the previous fiscal year.
Personal loans presented a mixed picture. While the overall loan portfolio continued to expand, growth moderated significantly.
Net personal loan flows declined to Rs17.5 billion during the review period from Rs29.1 billion a year earlier. Meanwhile, the outstanding stock of personal loans increased by 6.7%, compared with 12.2% growth in FY2024-25.
Economic recovery boosts retail lending
The Economic Survey attributed the overall improvement in consumer financing to strengthening economic activity, easing financial conditions and rising demand for retail banking products.
The strong rebound in housing and auto financing also points to improving consumer sentiment and greater access to bank credit despite a relatively cautious lending environment.
With consumer financing maintaining double-digit growth, the banking sector is expected to continue supporting household consumption and broader economic activity, particularly if macroeconomic stability strengthens further and monetary conditions remain favourable during FY2026-27.