What new mortgage proposition means

Dar es Salaam. The newly revamped mortgage proposition by ABSA Bank Tanzania and the National Housing Corporation (NHC) is set to make steps toward addressing the housing demand and the mortgage market in Tanzania.

The bank revealed at the weekend that under the arrangement, Absa has also partnered with an Insurance Service Provider through the Collateral Replacement Indemnity (CRI) to offer a 100 percent mortgage towards a property purchase facility, meaning that the customer will not be required to deposit any down payment.

Speaking during the launch of the new mortgage propositions, the bank’s managing director, Mr Abdi Mohamed, said the new mortgage arrangement seeks to address rising demand challenges by making it easier for people to access affordable housing.

He said another improvement is that for those who will not use the insurance door will only pay 10 percent down payment which is lower compared to 20 percent that was charged previously.

“Also, our flexibility in credit assessments has also meant that our customers will be able to include any verifiable additional incomes to be added into their disposable monthly income as a basis for the bank to determine loan amount eligibility,” he said.

The maximum loan size has also undergone a significant improvement, with an upward revision from Sh500 million to Sh1 billion.

This alteration eliminates the restrictions on loan sizes for clients, granting those with greater financial resources the ability to buy high-end housing units that were previously out of reach.

The bank has also opened up its mortgage solution to the Diaspora, offering home loan solutions to Tanzanians residing abroad who wish to invest in real estate back home.

“Our Diaspora Mortgage will be offered in dollars and loan seekers will be able to obtain either a property purchase, equity mortgage or property renovation facility,” said Absa head of retail banking, Ndabu Swere.

The bank had also signed a Memorandum of Understanding (MoU) with the NHC as a property developer for the bank to be able to finance the individual purchase of housing units sold by NHC.

This means that Absa customers now will be able to purchase house units from these property developers either before construction starts, during construction, or when newly completed.

Speaking at the event, NHC’s director general Mr Nehemia Mchechu explained that the corporation is aware of the challenges facing Tanzanians in accessing affordable housing and is committed to providing solutions.

“NHC is committed to providing affordable and decent housing for all Tanzanians and will continue to explore new initiatives and partnerships to achieve this goal,” he said.

Gracing the event minister for Lands, Housing and Human Settlements Dr Angeline Mabula said MoU between Absa and NHC, is a huge development and that it creates a win-win situation to all parties involved - for the bank as a private sector, NHC as government, and the customers.

“It addresses the challenge of availability of quality house units that have limited mortgage sales opportunities for banks, quality house availability and affordability on the customer side, and on NHC side this makes funds available for speedy completion of housing projects,” she said.

She said Tanzania’s total housing shortage was estimated at three million houses, the Tanzanian housing demand is now estimated at more than 300,000 houses annually from the previous 200,000 annual demand.