Bankers upbeat as mortgage market crosses Sh500bn mark

By Josephine Christopher

Dar es Salaam. Housing-related loans grew to Sh503.74 billion in the first quarter of 2022, influenced by satisfactory demand and positive economic prospects.

The Bank of Tanzania (BoT) revealed in an update yesterday that the outstanding mortgage debt increased by 1.41 percent compared to Sh496.61 billion recorded in March 2021.

This comes as credit to the private sector grew by 11.9 percent in the year to February compared with 2.5 percent in February 2021.

Speaking to The Citizen, the chief executive officer of the Tanzania Mortgage Refinance Company (TMRC), Mr Oscar Mgaya, said, regardless of the small rate of growth, the mortgage market continues to sustain positive growth to reflect the recovery of the economy from the impact of Covid-19.

Also Read: Experts: Why Tanzania mortgage market uptake still low

“The government appears determined on steering fiscal activities, business recovery by putting in place good policies that influence demand and supply in the market,” he said.

“Mortgage lenders, which are commercial banks, also finance other major activities. So, even if the rate in mortgage is not the same as other sectors, we are still growing in the right direction,” said Mr Mgaya.

Also Read: Why low-income earners can’t easily access housing loans in Tanzania

According to the central bank, the loans advanced by TMRC to primary mortgage lenders were equivalent to 26 percent of the total outstanding mortgage debt.

Five banking institutions still dominate the market, accounting for 66 percent of the total outstanding mortgage debt.

CRDB Bank Plc was a market leader commanding 38.57 percent of the mortgage market share, lending over Sh194.3 billion by March this year.

CRDB managing director Abdulmajid Nsekela said there is a huge demand for mortgage finance in Tanzania and the fact that it has been performing well shows that it is worth financing.

“As a bank, we believe this segment needs to be supported and given our distribution access so we play a bigger role,” he said.

Mr Nsekela who also doubles as the Tanzania Bankers Association (TBA) chairperson said apart from the mortgage market, commercial banks also distributed funds to other sectors of the economy needing funding.

CRDB is followed by Stanbic Bank, Azania Bank, NMB Bank Plc, and NCBA Bank.

In the first quarter, the central bank reported that Stanbic Bank offered Sh44.74 billion in mortgage loans, Azania Bank offered Sh35.6 billion, while NMB Bank Plc and NCBA Bank offered Sh33.64 billion and Sh23.94 billion respectively.

Moreover, the central bank stated that regardless of the increasing demand in the market, there was still a challenge of inadequate supply of affordable housing and the presence of high interest rates.

“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 Tanzanian,” the statement read in part.

Interest rates were still considered a constraint though there were improvements from the levels of 22 – 24 percent in 2010 to 15 – 19 percent offered presently.

Another challenge noted by the bank was the bureaucratic processes around issuance of titles which affected borrowers’ eligibility to access mortgage loans.