Mortgage finance continues to grow in Tanzania, with more and more banks targeting the sub-sector day by day.
This is due to the high demand for housing, whereby three million new housing units are required each succeeding year, while less than 300,000 are constructed annually, most by private sector investors and individuals.
High interest rates on housing finance remain a major constraint for prospective borrowers. This discourages them from borrowing to improve their houses or construct new ones, commercial and otherwise.
This sentiment was shared by the Bank of Tanzania (BoT) in its 2019 mortgage update relased last week.
Currently, interest on housing loans ranges from 15 to 19 percent slightly down from 24 percent in 2010.
According to BoT, the value of mortgage finance had reached Sh438.58 billion by the end of December 2019, up from Sh421 billion in 2018.
However, BoT noted in the report that inadequate supply of affordable housing, compounded by inordinately high interest rates, constrain efforts aimed at housing adequacy.
Evidently, reducing the extant interest rates on mortgage would ensure affordable loans that would enable more Tanzanians to own decent housing as we envisage a middle-income status in the next five years.