Role of five banks in third quarter mortgage market expansion

Josephine Christopher is a senior business journalist for The Citizen and Mwananchi newspapers

Mwananchi Communications Limitted

Five commercial banks played a key role in boosting housing loans in the third quarter of 2022 as the value of the outstanding mortgage debt gained by nearly Sh13 billion.
The total outstanding mortgage loans stood at Sh522.9 billion by the end of September this year.
This signals a 2.5 percent quarterly growth compared to Sh509.99 billion ($220.23 million) reported on June 30, 2022, available data shows.
Data from the Bank of Tanzania (BoT) shows that in the quarter to September 2022, for the purposes of residential housing, KCB Bank Plc led the list of lenders that had disbursed the highest amount of mortgage loans.
The lender disbursed Sh5.75 billion, raising its total mortgage debt outstanding to Sh21.03 billion from Sh15.28 billion that was reported in June.
Speaking to The Citizen KCB’s managing director Cosmas Kimario said the current trend of demand has been sustained for the past two and half years due to improvement in liquidity and market policies.
“There is a huge improvement in the market. Interests are now on relief compared to previous years. The mortgage tenures are also longer, complemented by people’s willingness to acquire mortgages,” said Mr Kimario. KCB was followed by NMB Bank Plc which added Sh3.15 billion to bring its total outstanding mortgage loans to Sh37.93 billion while Exim Bank Tanzania added Sh2.42 billion of new mortgage loans. This brought its total outstanding mortgage loans to Sh23.55 billion.
First Housing Finance Company Limited offered Sh2.41 billion in last quarter to bring its total outstanding mortgage loans to Sh18.61 billion while Azania Bank Limited provided Sh2.02 billion last quarter. Its total outstanding mortgage loans now stands at Sh38.39 billion.
Considering the size of the total outstanding debt the mortgage market was dominated by five top lenders, who commanded 64 percent of the market.
CRDB Bank Plc was a market leader commanding 37.07 percent of the mortgage market share, followed by Stanbic Bank (8.11 percent), Azania Bank (7.34 percent), NMB Bank Plc. (7.25 percent) and Exim Bank (4.5 percent).
Tanzania Mortgage Refinance Company Ltd (TMRC) continues to play its primary role in extending refinancing and pre-financing facilities to Primary Mortgage Lenders (PMLs).
BoT reports that TMRC extended loans worth Sh145.20 billion ($62.6 million) to fifteen (15) primary mortgage lenders, equivalent to 28 percent of the total outstanding mortgage debt.
TMRC’s chief executive Oscar Mgaya said: “The market is still maturing and there is a lot of opportunities for growth supported by the government policies that drove smooth recovery from the pandemic and improvement in business environment.”
“As the economy recovered investment in housing sector has increased with more private and public developers’ projects implemented across the country,” Mr Mgaya added.
Mr Mgaya said, however, there was still a huge demand for affordable housing in the country.
Moreover the central bank states that the market continues to be constrained by 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,” BoT said in part.
“While interests on mortgage loans improved from 22 - 24 percent in 2010 to 15 – 19 percent offered today, market interest rates are still relatively high, hence negatively affecting affordability,” the report reads.