Tanzanian Bank Launches New Mortgage Loan

Tanzania’s National Bank of Commerce (NBC) has launched a new loan product branded “HamiaKwako” for a minimum loan amount of TZS 20 million and longer repayment time.

Andrew Lyimo , NBC Head Of Reatil banking indicated that the bank will issue mortgage loans amounting to TZS 5 billion during the next five months. The figure will be assessed and recalculated after this initial period.

According to the National Housing Corporation (NHC), the current housing deficit in Tanzania is at 3,000,000 units with an annual growth in demand of 200,000 units.

The current deficit is product of the quick urban population growth that has risen from 14.8% in the year 1980 to 37.5% in 2005, and that is expected to reach the 46.8% at the end of 2015 according to NHC Strategic Plan for the year 2014/15.

The Tanzanian Government, aware of the shortage from several years ago, established the Tanzania Mortgage Refinance Company Limited (TMRC) with the support of the World Bank in 2010.

The average mortgage interest rate applied in the local market was since reduce from 22% to 16% at the end of 2014.

At the same time, with TMRC’s help, the average mortgage loan’s maturity was extended from five to ten years, to 15 to 20 years, due to the heightened competition among banks that have risen from three in the year 2010, to 19 last year.

In developed countries the housing sector contribute on the GDP with 50% to 60% per annum, in other Asian emerging countries it does on the GDP with 7% to 30%, while in Tanzania this number is below the 1% according to the NHC.