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Tanzanian Mortgage Loans Grew 228% In 2014-2015

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Tanzania Mortgage Refinance Company Limited (TMRC), a financial institution co-founded by the Tanzanian Government and the World Bank to support mortgage lending in the country, has recently released the Tanzania Mortgage Market Update highlighting a firm growth of 35% for the period H1-2015.

It also marked a rapid growth on a year to year basis of 228% from TZS 46.15 billion placed in the period ending in December, 2014 to TZS 151.48 billion placed in the period ending June, 2015.

This rapid growth more than doubled the mortgage outstanding debt from TZS 156 billion to TZS 334 billion, while the average debt size increased from TZS 62 million to TZS 75 million in the same period.

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The market outstanding debt increase was mainly driven by an increase on Equity Bank Tanzania’s mortgage accounts from 20 as of December, 2014 to 66 in June, 2015 which raised the bank’s mortgage outstanding debt over 600% from TZS 11.75 billion to TZS 82.46 billion and market share from 7.51% to 24.7% in the same period.

Regarding average debt size, Equity Bank Tanzania contributed with the majority of the increase since during the period its average mortgage loan size grew from about TZS 600 million to over TZS 1,200 million.

This is far higher the market’s average debt size at around TZS 100 million without considering Bank M and International Commercial Bank (ICB) which entered the mortgage market during the H1-2015 to compete in the high-income sector with Equity Bank Tanzania at an average loan size of TZS 800 million and TZS 600 million respectively.

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According to TMRC, further development is expected in the mortgage market with larger banks launching new mortgage loan products due to intensifying competition in traditional bank products.

Continuing real estate projects undertook by Tanzania’s National Housing Corporation (NHC), a state-run entity to support housing supply in all income earners levels, will also boost the mortgage market with projects at affordable prices through the Civil Servants Housing Scheme that plans to build 50,000 houses within the next five years.

Public pension funds are also supporting further development as the National Social Security Fund (NSSF) which is already developing a housing project in Kigamboni in Dar es Salaam, at a cost of USD 544.5 million and delivery date in 2017.

Tanzania’s mortgage market growth from 0.36% of the country’s GDP as of December, 2014 to 0.48% of GDP in June, 2015 there still room for development according to TMRA as neighboring countries have seen larger mortgage market growth in the same period.

Rwanda and Kenya’s mortgage debt to GDP grew from about 2.5% to 3.5% while Uganda stayed almost flat at around 1.0%.

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