Tanzania Mortgages

The number of banks offering mortgage products in Tanzania rose from 3 in 2010 to 18 in 2013 and 28 in 2016.

At the end of 2013 the total outstanding mortgage debt in Tanzania was TZS156b, while in 2016 it is TZS481b [+208%].

The increase is attributed to increased awareness on mortgage loans among borrowers as a result of various public awareness campaigns by banks, as well as increased competition among lenders.

Currently (2016), the Tanzanian mortgage market is dominated by 5 top lenders, accounting for 70% of the mortgage market.

Equity Bank commands 20% of the mortgage market share, followed by Diamond Trust Bank (16%), Stanbic (11%), Bank M (10%) and Azania Bank (9%).Tanzania mortgage lenders market shares

According to latest available data, the average loan size of these lenders as of June 2016 was TZS133m, offered at interest rates ranging between 16 –19%.

Currently (2016), the ratio of mortgage debt outstanding to GDP in Tanzania is around 0.53%, which is lower than that in other East African countries, such as Uganda (0.9%), Kenya (3.45%) and Rwanda (3.52%).

This is mainly due to the inadequate supply of affordable housing and high interest rates in Tanzania.

For this, the Government of Tanzania has committed to ensuring that loan interest rates are reduced in order to enable many Tanzanians to acquire loans.

“There is a shortage of 3m housing units in Tanzania, hence the demand is huge, particularly for affordable housing. […]Private developers in Tanzania should work on large-scale projects and the government should provide incentives to make affordable housing commercially viable for developers,” Oscar Mgaya, CEO of Tanzania Mortgage Refinance Company (TMRC), said in a recent interview with TanzaniaInvest.

Expansion of Mortgage Financing in Tanzania

The Tanzania Mortgage Refinance Company Limited (TMRC) is a financial institution co-founded by the Tanzanian Government and the World Bank in 2010 to support member banks to extend long-term mortgage loans to the public through provision of long-term funds.

Initially, TMRC was established as a member-based institution, not lending to non-members. As of June 2016, TMRC has extended loans worth TZS46b to 8 of its member banks.

In July 2016, TMRC opened up lending to non-member banks as part of its strategy to expand its customer base and effectively fulfill its role of being a catalyst to mortgage lending in the country.