CRDB Bank is dominating the house lending market by over one-third, and an immediate rival is significant far behind.
The bank is at the driver’s seat of 33 lenders dealing in the country’s mortgage business, commanding 38.05 per cent compared to the second in line Stanbic Bank with 8.11 per cent by mid-June.
According to the Central Bank’s Tanzania Mortgage Market Update -30 June 2022, CRDB has issued some 1,624 loans worth 193.87bn/- to take stewardship of the business.
Stanbic, the second in the line, followed CRDB at a noticeable distance with a market share of 8.11 per cent after issuing 197 loans valued at 41.37bn/-.
The BoT report in collaboration with Tanzania Mortgage Refinance Company (TMRC) showed that Azania Bank is in the third slot after issuing 393 loans worth 36.37bn/- to control a market share of 7.13 per cent.
NMB is in the fourth position after dishing out 332 loans valued at 34.78bn/- to take 6.82 per cent of the pie share.
In the fifth position is NCBA Bank (Tanzania) controlling 4.63 per cent after issuing 94 loans valued at 23.6bn/-.
BoT said the demand for housing and housing loans is mainly driven by the strong and sustained economic growth with GDP growth averaging 6 -7 percent over the past decade, the fast-growing Tanzanian population, which is estimated to more than double by 2050, and efforts by the government in partnership with global non-profit institutions and foreign governments to meet the growing demand of affordable housing.
Demand for housing and housing loans remains extremely high because of an inadequate supply of equitable houses and high-interest rates charged on housing loans.
“Most lenders offer loans for home purchase and equity release while a few offer loans for self-construction which continue to be expensive and beyond the reach of the average Tanzanians,” the report showed.
Nevertheless, the interests on mortgage loans improved from 22-24 per cent in 2010 to 15-19 per cent offered today, market interest rates are still relatively high hence negatively affecting affordability.
“Additionally”, the report said, “cumbersome processes around the issuance of titles (especially unit titles) continues to pose a challenge by affecting borrowers’ eligibility to access mortgage loans.”
The number of banks offering mortgage loans has grown from only three banks in 2010 to 33 by the end of June while repayment has increased from the maximum of 5-7 years to 25 years currently offered. The mortgage interest rates declining from 22-24 per cent offered in 2010 to currently 15-19 per cent.
“The competition in the market has led to the emergence of other products that are impacting mortgage market growth as the products have favorable terms than mortgage products and are used for housing purposes,” BoT said.
These products are competing with mortgages in terms of loan amount and to some extent tenor as they are offering consumer loans for the tenor of up to seven years amounting to around 120m/-, an amount enough to buy a housing unit.
The other five banks in the top ten are Tanzania Commercial Bank controlling 4.13 per cent, Exim (4.05 per cent), First Housing Finance Company (3.18 per cent), KCB Tanzania (3.00 per cent) and DCB Bank (2.71 per cent).
The country mortgage market registered a 1.24 per cent annual growth in the value of loans at the end of June. The total mortgage debt outstanding that resulted from lending by the banking sector for residential housing was 509.99bn/-.