Tanzania Mortgage Market Up by +3.6% in Q1 2023 and Up by +10% YOY

The mortgage market in Tanzania registered a  3.6% growth in the value of residential mortgages in the quarter ending 31st March 2023 as compared to the 1.7% growth recorded in the previous quarter ending on 31st December 2022.

On a year-to-year comparison, a 10% growth was registered in the value of mortgage loans as of 31 March 2022.

The outstanding mortgage debt as of 31 March 2023 increased to TZS 551.76 billion equivalent to USD 237.53 million as compared to TZS 531.98 billion equivalent to USD 229.18 million reported on 31 December 2022.

The average mortgage debt size was TZS 98.60 million equivalent to USD 42,446 marking a slight increase from TZS 93.53 million equivalent to USD 40,292 reported in the previous quarter.

The ratio of outstanding mortgage debt to Gross Domestic Product (GDP) declined to 0.30% compared to 0.32% recorded in the previous quarter.

Tanzania Mortgage Market in Q1 2023

There was no new entrant into the mortgage market during the first quarter of 2023. The number of banks reporting to have mortgage portfolios remained at 31 banks as of 31 March 2023.

Mortgage debt advanced by the top five Primary Mortgage Lenders (PMLs) accounted for 65% of the total outstanding mortgage debt.

CRDB Bank was the market leader commanding 35.17% of the mortgage market share, followed by KCB Bank (8.71%), NMB Bank Plc. (7.36%), Azania Bank (7.26%) and Stanbic Bank (6.71%).

Typical interest rates offered by mortgage lenders ranged between averages of 15-19%.

Tanzania Housing Demand

The Tanzanian housing demand is estimated at 200,000 houses annually and a total housing shortage of 3 million houses.

The demand has been boosted by easy access mortgages, with the number of mortgage lenders in the market increasing from 3 in 2009 to 31 by 31 March 2023 and the average mortgage interest rate falling from 22% to 15%.

The Tanzanian housing sector’s fast-growing demand is mainly driven by 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 of affordable housing.

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