The growth in the mortgage market, challenges such as high-interest rates and a shortage of affordable housing continue to impact its expansion. The market is dynamic, with key players and economic factors influencing its trajectory.

Credit Growth:

• The credit growth to the private sector, including mortgages, is notable, with a 21 percent increase in the year ending August 2023. This growth reflects a high demand for new loans and is consistent with improvements in the business environment and supportive fiscal policies.

Agricultural Sector Credit Growth:

• The agricultural sector has experienced substantial credit growth at 52.4 percent. This growth is attributed to policy measures taken by the Bank of Tanzania (BOT) to promote cost-effective credit intermediation, coupled with ongoing government interventions to support the sector.

Overall Economic Growth:

• The Tanzanian housing sector's growth is linked to the country's strong and sustained economic growth, with GDP growth averaging 6.2 percent over the past decade. This economic growth contributes to increased demand for housing and financial services.

Government Initiatives:

• Government efforts, in partnership with global non-profit institutions and foreign governments, are directed towards meeting the growing demand for affordable housing. This forecasts a collaborative approach between the public and private sectors in addressing housing and financial needs.

Housing Demand as an Economic Indicator:

• The demand for housing, as indicated by the estimated demand of 200,000 houses annually and a total housing shortage of 3 million houses, serves as an economic indicator. The housing sector's performance is influenced by factors such as population growth and government initiatives, reflecting the broader economic landscape.

Constraints on Financial Sector Growth:

• The information highlights high-interest rates and a lack of affordable housing as prime constraints on mortgage market growth. These challenges may also extend to other areas of the financial sector, indicating potential obstacles to overall financial market expansion.

The current state of the mortgage market in Tanzania as of September 30, 2023:

Market Growth:

• The mortgage market in Tanzania experienced a 2 percent growth in the value of residential mortgages compared to a 6 percent growth in the previous quarter (up to June 30, 2023).
• There was a 14 percent year-on-year growth from TZS 522.95 billion in Q3 2022 to TZS 593.76 billion in Q3 2023.

Market Dynamics:

• No new entrants joined the mortgage market during the quarter, and the number of banks offering mortgage portfolios remained at 31.
• The outstanding mortgage debt increased to TZS 593.76 billion, equivalent to US$ 237.53 million, compared to TZS 584.59 billion (US$ 249.92 million) reported in the previous quarter.

Competition and Market Share:

• The mortgage market was competitive, with 31 different banking institutions offering residential mortgages.
• The top five lenders dominated the market, with CRDB Bank Plc leading with a 33.30% market share, followed by KCB Bank, NMB Bank Plc., Azania Bank, and Stanbic Bank.

Debt Size and Ratios:

• The overall average mortgage debt size increased to TZS 103.46 million (US$ 41,388) from TZS 102.13 million (US$ 43,662) in the previous quarter.
• The ratio of outstanding mortgage debt to GDP increased to 0.36 percent compared to 0.33 percent in the previous quarter.

Interest Rates:

• Typical interest rates offered by mortgage lenders ranged between averages of 15 - 19 percent.

Market Drivers:

• The Tanzanian housing sector's growth is attributed to sustained economic growth, a fast-growing population, and government efforts to meet the demand for affordable housing.
• The demand for credit in the private sector, including mortgages, grew by 21 percent in the year ending August 2023.

Constraints:

• High-interest rates and a lack of affordable housing are identified as prime constraints on mortgage market growth.

Housing Demand:

• The demand for housing in Tanzania is estimated at 200,000 houses annually, with a total housing shortage of 3 million houses according to the National Housing Corporation (NHC) report.
• Easy access to mortgages has contributed to the growth in the housing sector, with the number of mortgage lenders increasing from 3 in 2009 to 31 by September 30, 2023, and the average mortgage interest rate falling from 22 percent to 15 percent.