Tanzania Mortgage Market Up +7.5% in Q1 2022 Compared to Q1 2021

The mortgage market in Tanzania registered a 1.41% growth in the value of mortgage loans as of 31 March 2022 as compared to the 2% growth recorded in the previous quarter.

This was indicated in the Tanzania Mortgage Market Update – 31 March 2022 recently released by the Bank of Tanzania (BOT) and the Tanzania Mortgage Refinance Company (TMRC).

Tanzania Mortgage Market Growth Q1 2022

The outstanding mortgage debt as of 31 March 2022 increased to TZS 503.74 billion equivalent to USD 218.07 million.

On 31 December 2021, the outstanding mortgage debt was TZS 496.61 billion equivalent to USD 215.06 million.

The outstanding mortgage debt as of 31 March 2021 was TZS 468.25 billion equivalent to USD 202.71 million, leading to a yearly growth of 7.5%.

On 31st March 2022, the average mortgage debt size as at was TZS 81.49 million equivalent to USD 35,276 marking a slight increase from TZS 80.40 million equivalent to US$ 34,815 reported on 31 December 2021.

The Tanzanian housing sector’s fast-growing demand (which is estimated at 200,000 houses annually and a total housing shortage of 3 million houses) is mainly driven by the strong and sustained economic growth with GDP growth averaging 6-7% over the past decade, the fast-growing Tanzanian population which is estimated to more than double by 2050, and efforts by the Government in partnership with global non-profit institutions and foreign Governments to meet the growing demand for affordable housing

Tanzania Mortgage Market Competition

The number of mortgage lenders in the Tanzania market increased from 3 in 2009 to 33 by 31 December 2021.

Meanwhile, the average mortgage interest rate fell from 22% to 15%, boosting access and demand for mortgages.

As of 31 March 2022, the same 33 different banking institutions offer mortgage loans. The mortgage market is dominated by five top lenders, who commanded 66% of the market: CRDB Bank (38.57% of the mortgage market share), followed by Stanbic Bank (8.88%), Azania Bank (7.07%), NMB Bank (6.68%) and NCBA Bank (4.75%).

Obstacles to Growth of Tanzania Mortgage Market

Demand for housing and housing loans remains extremely high as it is constrained by an inadequate supply of equitable houses and high interest rates charged on housing loans.

Most lenders offer loans for home purchase and equity release while a few offer loans for self-construction which continue to be expensive and beyond the reach of the average Tanzanians.

While interests on mortgage loans improved from 22-24% in 2010 to 15–19% offered today, market interest rates are still relatively high hence negatively affecting affordability.

Additionally, cumbersome processes around the issuance of titles (especially unit titles) continue to pose a challenge by affecting borrowers’ eligibility to access mortgage loans.