ALTHOUGH it is growing rapidly, the
For example, the mortgage debt to GDP for
During the period under review, NHC intends to increase the housing sector contribution to GDP to 4 per cent to cater for the ever rising demand. Statistics from the
According to the report, the recent hike of yields in the treasury bills to over 15 per cent have negatively impacted on affordability of all forms of long term loans, including mortgages. The analysis stated that the typical interest rates offered by lenders range between 18 per cent and 21 per cent.
"Most lenders offer loans for home purchase but increasingly different products are emerging such as loans for self-construction and for equity withdrawal, which continue to be expensive and beyond the reach of the average Tanzanian," stated the report.
Despite the hurdles, the mortgage market has been growing steadily as the pace of housing investment continues to pick up. For example, the year ended
According to BoT mortgage market analysis for the fourth quarter last year, the total number of mortgage loans grew 2,784 at the end of the year compared to 1,889 at the beginning of 2013.
The housing supply has greatly been hampered by the long standing problem of near absence of formal mortgage finance.
This problem has led to around 99 per cent of the houses to be built out of pockets. Such houses are built on incremental basis taking 5 to 10 years to complete instead of nine to 12 months. Consequently, colossal amount of capital is immobilised for a long time.
This tied up capital is likely to be greater than total bank deposits in the country. Factors attributed to this increase include favourable interest rate environment during the year and increased awareness on mortgage loans among borrowers.
Also, the public awareness campaign carried by major banks as well as the launch of mortgage loan product by
In the period, 19 different banking institutions were offering mortgage loans, with the number expected to increase even further as more lenders continue to launch mortgage loan products.
The mortgage market was dominated by three top lenders, who amongst themselves command about 67 per cent of the mortgage market.
The market experienced new entrants and there are prospects that large banking institutions such as
Also, the construction of new houses by the
Likewise new measures such as the Civil Servants Housing Scheme which is expected to build 50,000 affordable houses in the next five years have the potential to boost the mortgage market even further.
Most Pensions funds are also actively engaged in advancing mortgage loans to their members, something which will further boost the market in
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