Tanzania’s mortgage market registered a 1.41 per cent growth in the value of mortgage loans during quarter I, 2022 as compared to 2 per cent growth recorded in the previous quarter.
According to a joint Tanzania Mortgage Market Update released by the Tanzania Mortgage Refinance Company (TMRC) and the Bank of Tanzania (BoT) seen by The Business Wiz, the Tanzanian housing sector’s fast-growing demand was mainly driven by the strong and sustained economic growth with GDP growth averaging between 6 -7 per cent over the past decade.
The report noted that the total outstanding mortgage debt that resulted from lending by the banking sector for the purposes of residential housing was 503.7bn/- (US$ 218.07 million).
The report said the average mortgage debt size stood at 81.4m/- ($ 35,276) making a slight increase from 80.4m/- ($34,815) reported in Quarter IV, 2021.
“The ratio of outstanding mortgage debt to Gross Domestic Product (GDP) decreased to 0.30 per cent compared to 0.35 per cent recorded in the previous quarter,” the report said.
The report said the performance of the economy was satisfactory in 2021 and is projected to continue improving in 2022 owing to the normalization of business and investment activities after the pandemic, the report said.
It added that the Tanzanian housing demand estimated at 200,000 houses annually has been boosted by easy access to mortgages, with the number of mortgage lenders in the market increasing from 3 in 2009to 33 by December 31, 2021 with the average mortgage interest rate falling from 22 per cent to 15 percent.
The report noted that 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 Tanzanians. Market interest rates are still relatively high hence negatively affecting affordability, the report said.
It said that additionally the cumbersome processes around the issuance of titles (especially unit titles) continue to pose a challenge by affecting borrowers ‘eligibility to access mortgage loans.
“High-interest rates and lack of affordable housing remain the prime constraints on mortgage market growth. TMRC continues to play its primary role in extending refinancing and pre-financing facilities to Primary Mortgage Lenders (PMLs),” the report added.