MICROFINANCE SECTOR TO DRIVE HOUSING GROWTH IN TANZANIA
There is
an enormous potential for housing microfinance in Tanzania, the Centre for
Affordable Housing Finance (CAHF) in Africa indicates in its latest report on
Africa’s housing finance markets.
CAHF attributes the potential to the fact that
41% of Tanzanians who borrow microloans plan to use them for housing
construction or improvements.
Nonetheless, Tanzania’s mortgage
market is among the smallest in the East African region. According to 2014
Findex, only 4.5% of the adults aged 15 years and above report having an
outstanding loan to purchase a home. According to Bank of Tanzania (BOT), the
mortgage market recorded an annual growth rate in mortgage loan balances of 45%
in 2015.
As at June 30th 2016, total mortgage
debt stood at USD219.75m and 3,627 mortgages, compared to December 31st 2015
where the mortgage debt stood at USD164m with 3,390 mortgages. The average loan
size as at June 30th 2016 was USD60,586.93, an increase from December 31st 2015
when the average loan size was USD48 364.06.
Typical rates offered by lenders for
mortgage products currently vary between 16% and 19%. Given affordability
levels, the microfinance sector is especially important in addressing housing
supply in Tanzania and is growing steadily.
Tanzania Housing The demand for housing in
Tanzania is estimated at 200,000 houses annually, which results in a current
housing shortage of 3m houses. Alternative building materials are being
explored as a way to deliver these houses on a rapid scale, according to CAHF.
The Tanzanian housing demand has been boosted
by easier access to mortgages, with the number of mortgage lenders in the
market increasing from 3 in 2009 to 21 in 2015.
The average mortgage interest rate
in Tanzania fell from 22% to 16% during the same period.
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