Mortgages

TANZANIA MORTGAGE DEBT 2014 2019

Tanzania’s mortgage market grew 4% in 2019 reaching an outstanding mortgage debt of USD 190.74 million, compared to USD 183.67 million in 2018. The average mortgage debt was USD 34,935 in 2019 compared to USD 36,763 in 2018.

In 2019, the ratio of mortgage debt outstanding to GDP in Tanzania stood at 0.36%.

The number of mortgage lenders increased from 32 in 2018 to 34 in 2019 following the entrance of Ecobank Tanzania and the Tanzania Postal Bank during the year.

The mortgage market is dominated by five lenders, who amongst themselves command 68% of the mortgage market. CRDB is the market leader with A 40.03% market share, followed by Stanbic Bank (13.24%), Azania Bank (6.31%), NMB Bank (4.46%), and KCB Bank (4.24%).

The typical interest rates offered by mortgage lenders ranged between 15% and 19% in 2019, compared to 22% and 24% in 2010.

Tanzania Mortgage Market Constraints

High interest rates and lack of affordable housing remain the major constraints on the Tanzanian mortgage market growth despite the high demand for housing and housing loans.

Most lenders offer loans for home purchase and equity release while a few offer loans for self-construction which for the most part continue to be expensive beyond the reach of the average Tanzanians.

An estimated 3.1 million urban households (75%) earn less than USD 1,000 per month, implying that they require affordable housing solutions costing below USD 19,300.

Furthermore, of these 3.1 million households, 1.7 million urban households (40%) could only afford products costing USD 9,600.

Currently, most of Tanzania’s mortgages are for products costing above USD 40,000 which means that unless housing finance is made much more widely available in the future, 93% of all urban households are excluded from mortgaged housing.

Expansion of Mortgage Finance in Tanzania

A key element in the growth of the mortgage market in Tanzania is the provision of long-term funding both in the forms of refinancing and pre-financing.

This role is fulfilled by the Tanzania Mortgage Refinance Company (TMRC), 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. 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.

TMRC has already extended loans worth USD 65 million to 11 of its member banks and five non-member banks.

In 2019, refinancing and pre-financing mortgage loans advanced by TMRC to its member and non-member banking institutions were equivalent to USD 50 million or 26% of the total outstanding mortgage debt.

A significant opportunity therefore still exists for TMRC to refinance the remaining 74% of the mortgage market portfolio.

Sources: Bank of Tanzania (BoT), Centre for Affordable Housing Finance in Africa (CAHF)
Last Updated: 5 October 2020