CRDB Bank dominates the home loan market by more than a third, with an immediate competitor lagging far behind.
The bank is in charge of 33 lenders who handle the country’s mortgage business, with 38.05% compared to second-placed Stanbic Bank with 8.11% in mid-June.
According to the Central Bank’s Tanzania Mortgage Market Update of 30 June 2022, the CRDB has issued some 1,624 loans worth 193.87 billion/- to support the business.
Stanbic, the second in line, trailed CRDB at a notable distance with a market share of 8.11% after issuing 197 loans valued at 41.37 billion/-.
The BoT report in collaboration with the Tanzania Mortgage Refinance Company (TMRC) showed that Azania Bank is in the third position after issuing 393 loans worth 36.37 billion/- to control a market share of 7.13%.
NMB is in fourth place after issuing 332 loans valued at 34.78 billion/- to take 6.82% of the pie.
In fifth position, NCBA Bank (Tanzania) controls 4.63% after issuing 94 loans valued at 23.6 billion/-.
The BoT said demand for housing and housing loans is mainly driven by strong and sustained economic growth with GDP growth averaging 6-7% over the past decade, Tanzania’s rapid population growth, which is expected to more than double by 2050, and government efforts in partnership with global non-profit institutions and foreign governments to meet the growing demand for affordable housing.
The demand for housing and housing loans remains extremely high due to an insufficient supply of fair housing and the high interest rates charged on housing loans.
“Most lenders offer home purchase and capital release loans while a few offer self-build loans which continue to be expensive and out of reach for average Tanzanians,” indicates the report.
Nevertheless, interest on mortgages has improved from 22-24% in 2010 to 15-19% offered today, market interest rates are still relatively high, which negatively affects affordability .
“Furthermore,” the report states, “the cumbersome processes associated with the issuance of titles (particularly unit titles) continues to pose a challenge by affecting the eligibility of borrowers to access mortgage loans.”
The number of banks offering mortgages has increased from just three banks in 2010 to 33 at the end of June, while repayment has increased from the maximum of 5 to 7 years to 25 years currently offered. Mortgage interest rates going from 22 to 24% offered in 2010 to 15 to 19% currently.
“Competition in the market has led to the emergence of other products which have an impact on the growth of the mortgage market, as the products have more favorable conditions than mortgage products and are used for housing purposes,” said said the BoT.
These products compete with mortgages in terms of amount and, to some extent, duration, as they offer consumer loans with terms up to seven years and amounting to around 120m/ -, an amount sufficient to buy a home.
The other five banks in the top 10 are Tanzania Commercial Bank which controls 4.13%, Exim (4.05%), First Housing Finance Company (3.18%), KCB Tanzania (3.00%) and DCB Bank ( 2.71%).
The country’s mortgage market recorded an annual growth of 1.24% in the value of loans at the end of June. The total stock of mortgage debt resulting from loans granted by the banking sector to residential housing amounted to 509.99 billion/-.