Mortgage lending jumps, but home ownership still elusive

While interest rates on residential mortgages have dropped from 22–24 percent in 2010 to between 13–19 percent today, the central bank notes that rates remain relatively high, affecting affordability negatively.

“Market interest rates are still relatively high, hence negatively affecting affordability,” BoT said in its mortgage market update.

The central bank added that 31 financial institutions now offer mortgage products, up from just three in 2009, with average mortgage sizes climbing above Sh118 million (about $44,000).

However, many experts agree that the current mortgage offerings remain costly and largely inaccessible to average Tanzanians.

An economist at the University of Dar es Salaam, Dr Wilhelm Ngasamiaku, said mortgages remain “very expensive” and out of reach even for employed professionals.

He pointed out that a typical three-bedroom family home in some developments costs between Sh200 million and Sh300 million, an amount for which one could build a larger, more customised home elsewhere.

“There is a real need for interest rates to come down, at least into single digits. That’s when we’ll begin to see meaningful inclusion.”

Despite rapid urbanisation and a growing middle class, the formal housing market has not responded adequately with products matching income levels.

Tanzania faces a housing deficit of about three million units, growing annually by over 200,000 new homes. Yet, most available financing targets high-end developments and prime urban areas.

“Mortgage financing remains out of reach for many locals,” real estate advisor Andrew Kato wrote in a recent LinkedIn post.

He highlighted other market inefficiencies, such as tenants facing demands for six to twelve months’ rent upfront with little room for negotiation, and buyers lacking access to formal property valuations, resulting in potential overpayment for underperforming homes.

Mr Kato called for the setting up of a functional real estate regulatory authority to promote consumer protection, transparency, and fair landlord-tenant relations.

Financial analyst Christopher Makombe cited both structural and behavioural factors behind low mortgage uptake.

“Fear of long-term debt, lack of financial knowledge, and inflexible mortgage products with large down payments, valuation charges, insurance, legal fees, and bureaucratic procedures deter many,” he said.

Mr Makombe urged market stakeholders and policymakers to increase flexibility and affordability.

“This could involve expanding refinancing options for banks at lower rates, introducing mortgage guarantee schemes to reduce credit risk, and simplifying application processes through digitisation and cost reductions.”

Tanzania Mortgage Refinance Company (TMRC) remains central to market growth by providing long-term funding to Primary Mortgage Lenders (PMLs).

By March 31, 2025, TMRC had lent Sh162.7 billion to 17 PMLs, accounting for about 24 percent of total outstanding mortgage debt, signalling room for further refinancing expansion.

The BoT report shows the top five lenders control over 62 percent of the mortgage portfolio.

CRDB Bank Plc leads with a 31.99 percent market share and a portfolio valued at Sh218.49 billion across 1,636 accounts.

NMB Bank Plc ranks second with a 10.95 percent share, holding Sh74.80 billion in outstanding loans.

Azania Bank Plc has grown to third place, holding 8.34 percent with Sh56.95 billion, while Stanbic Bank Tanzania Ltd controls 5.46 percent with Sh37.30 billion, across just 172 accounts, indicating higher-value loans per client.

First Housing Finance Company Ltd holds 5.3 percent of the market with Sh36.23 billion in mortgage loans.