TANZANIA MORTGAGE MARKET UPDATE - MARCH 2022
The mortgage market in Tanzania registered a 1.41 percent growth in the value of mortgage loans as of 31 March 2022 as compared to the 2 percent growth recorded in the previous quarter.
There was no new entrant into the mortgage market during the year. The number of banks reporting to have mortgage portfolios remained at 33 banks. Outstanding mortgage debt as of 31 March 2022 increased to TZS 503.74 billion1 equivalent to US$ 218.07 million as compared to TZS 496.61 billion2 equivalent to US$ 215.06 million
reported on 31 December 2021.
Average mortgage debt size as at was TZS 81.49 million equivalent to US$ 35,276 marking a slight increase from TZS 80.40 million equivalent to US$ 34,815 reported on 31 December 2021.
The ratio of outstanding mortgage debt to Gross Domestic Product (GDP) decreased to 0.30 percent compared to 0.35 percent recorded in the previous quarter.
Mortgage debt advanced by the top 5 Primary Mortgage Lenders (PMLs) accounted for 66 percent of the total outstanding mortgage debt.
Typical interest rates offered by mortgage lenders ranged between averages of 15 – 19 percent.
The Tanzanian housing sector’s fast-growing demand is mainly driven by the strong and sustained economic growth with GDP growth averaging 6 -7 percent over the past decade, the fast-growing Tanzanian population which is estimated to more than double by 2050, and efforts by the Government in partnership with global non-profit institutions and foreign Governments to meet the growing demand of affordable housing.
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. Prices of goods and services have risen in the recent months, but inflation was within the target, and is projected to remain in line with the target. Upward risk to inflation has elevated due to rising commodity prices in the world market, attributable to supply chain constraints
Credit extended to the private sector and central government by the banking system grew by 24.5 percent in the year ending February 2022 compared with 6.9 percent in February 2021. Strong private sector credit growth was high at 11.9 percent compared with 2.5 percent in February 2021, attributable to improving business conditions from adverse effects of COVID-19, coupled with supportive monetary and fiscal policies. Much of the growth was absorbed by mining; micro, small and medium enterprises (personal loans); trade, and manufacturing activities. Personal loans accounted for the largest share of outstanding private sector credit (24.3%), followed by trade (18.3%), manufacturing (17.4%), and agriculture (2.2%)4.
The Tanzanian housing demand (which is estimated at 200,000 houses annually and a total housing shortage of 3 million houses as per the NHC report) has been boosted by easy acces to mortgages, with the number of mortgage lenders in the market increasing from 3 in 2009 to 33 by 31 December 2021 and the average mortgage interest rate falling from 22 percent to 15 percent.
Efforts to develop housing projects by developers continue with a special focus on Dodoma Capital City as the Government has relocated its administrative functions to Dodoma. High-interest rates and lack of affordable housing remain the prime constraints on mortgage market growth.
Tanzania Mortgage Refinance Company (TMRC) continues to play its primary role in extending refinancing and pre-financing facilities to Primary Mortgage Lenders (PMLs).