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Tanzania Mortgage Market Growth Slowed in 2017

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The mortgage market in Tanzania registered a growth of 6% in 2017, compared to a growth rate of 16% in 2017, the Tanzania Mortgage Refinance Company Limited (TMRC) indicates in its latest market update of 31 December 2017.

3 new banks joined the list of mortgage lenders in Tanzania, increasing the total number of lenders to 31 from 28 in 2016. However, the mortgage debt advanced by top 5 lenders accounts for 59% of the total outstanding mortgage debt.

The new entrants in 2017 were Letshego Bank (T) Limited, Yetu Microfinance Bank PLC and Mufindi Community Bank Ltd.

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Outstanding mortgage debt as at 31 December 2017 stood at TZS 344.84 billion (±USD 151.72 million) compared to TZS 324.08 billion (±USD 142.59 million) as at 31 December 2016.

During 2017 the average mortgage debt size was TZS 82.62 million (±USD 36,350) versus TZS 93.6 million as at 31 December 2016(±USD 41,200) ), with a typical interest rate of 16-19%.

The ratio of outstanding mortgage debt to Gross Domestic Product (GDP) stood at 0.33% in 2017 versus 0.34% in 2016).

TMRC stressed that a number of real estate development projects are currently underway, creating various opportunities for interested local and foreign investors.

It also reminds that Tanzanian housing sector’s fast-growing demand continues to be driven by the strong and sustained economic growth averaging 6-7% and the fast-growing Tanzanian population of 55 million and is expected to more than double by 2050.

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

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However, high-interest rates and lack of affordable housing remain the major constraints on market growth.

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