Tanzania Mortgage Market Grew by 5% in March 2020

Tanzania Mortgage Market March 2020

The mortgage market in Tanzania registered a 5% growth in the value of mortgage loans as of 31 March 2020 compared to its corresponding quarter ended 31 March 2019.

This was indicated in the Tanzania Mortgage Market Update – 31 March 2020 released by the Bank of Tanzania on 23rd July 2020.

During the same period, total lending by the banking sector for residential housing was TZS 436.02 billion, equivalent to USD 189.47million.

The outstanding mortgage debt stood at TZS 436.02 billion equivalent to USD 189.47 million compared to TZS 414.79 billion as of 31 March 2019.

The average mortgage debt size was TZS 79.26 million, which is equivalent to around USD 34,442 (TZS 80.48 million as of 31 March 2019).

The ratio of outstanding mortgage debt to Gross Domestic Product (GDP) remained unchanged at 0.35% compared to its corresponding quarter 31 March 2019.

Increasing Competition in the Tanzanian Mortgage Market

The number of mortgage lenders increased to 34 compared to 32 lenders in 31 March 2019.

The mortgage debt advanced by the top 5 lenders accounts for 68% of the total outstanding mortgage debt (72% as of 31 March 2019).

CRDB Bank was the market leader commanding 39.97% percent of the mortgage market share, followed by Stanbic Bank (13.47%), Azania Bank (6.65%), NMB Bank (4.75%), and CBA Bank (4.24%).

Obstacles to Growth of the Tanzanian Mortgage Market

The demand for housing and housing loans in Tanzania remains extremely high–the report explains–but is constrained by an inadequate supply of affordable housing and top interest rates.

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The typical interest rates offered by mortgage lenders ranged between an average of 15-19%.

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

While improved from the levels of 22-24% in 2010 to the current 15-19% percent offered today, market interest rates are still relatively high hence negatively affecting affordability.

Additionally, while some improvements have been noted, bureaucratic processes around the issuance of titles (especially unit titles) continue to pose a challenge by affecting borrowers’ eligibility to access mortgage loans.