The mortgage market in Tanzania registered a +2.54% growth in the value of mortgage loans as of 30 September 2022 as compared to the +1.24% growth recorded in the previous quarter.
This was indicated in the Tanzania Mortgage Market Update – 30 September 2022 recently released by the Bank of Tanzania (BOT) and the Tanzania Mortgage Refinance Company (TMRC).
Tanzania Mortgage Market Growth Q3 2022
Outstanding mortgage debt as of 30 September 2022 increased to TZS 522.95 billion, equivalent to USD 225.46 million as compared to TZS 509.99 billion equivalent to USD 220.23 million reported on 30 June 2022.
On a year-to-year comparison, +7.01% growth was registered in the value of mortgage loans as of 30 September 2022.
The average mortgage debt size was TZS 87.27 million equivalent to USD 37,628 marking a slight increase from TZS 82.56 million equivalent to US$ 35,654 reported in the previous quarter.
The ratio of outstanding mortgage debt to Gross Domestic Product (GDP) increased to 0.30% compared to 0.29% recorded in the previous quarter.
The Update explains that 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.
Tanzania Mortgage Market Competition
As of 30 September 2022, 32 different banking institutions were offering mortgage loans.
The mortgage market was dominated by five top lenders, who commanded 64% of the market. CRDB Bank was the market leader commanding 37.07% of the mortgage market share, followed by Stanbic Bank (8.11%), Azania Bank (7.34%), NMB Bank (7.25%), and Exim Bank (4.50%).
The typical interest rates offered by mortgage lenders ranged between averages of 15-19%.
Obstacles to the Growth of the Tanzanian 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 Tanzanian.
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.
Further, competition in the market has led to the emergence of other products that are impacting mortgage market growth as the products have favorable terms than mortgage products and are used for housing purposes.
These products are competing with mortgages in terms of loan amount and to some extent tenor as they are offering consumer loans for the tenor of up to seven years amounting to around TZS 120 million, an amount enough to buy a housing unit.