Inadequate supply of affordable houses and high interest rates have been compounding the ever rising demand for houses and housing loans.
The fourth quarter mortgage market analysis released by the Bank of Tanzania (BoT) attribute the recent hike of yields in the treasury bills to over 15 per cent to have negatively impacted on affordability of all forms of long term loans, including mortgages.
The fourth quarter mortgage market analysis released by the Bank of Tanzania (BoT) attribute the recent hike of yields in the treasury bills to over 15 per cent to 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 December saw the total lending
by the banking sector for the purposes of residential housing going up
to 156.5bn/-, equivalent to 46 per cent growth.
Similarly, the total number of mortgage
loans grew 2,784 at the end of the year compared to 1,889 at the
beginning of 2013, an increase of 47 per cent.
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
CRDB Bank, Exim Bank and other Tanzania Mortgage Refinance Company
Limited (TMRC) member banks that had no such a product.
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.
Azania Bank, with longest presence in
the mortgage market, was a market leader commanding 24 per cent of
market share, closely followed by Stanbic Bank with about 21 per cent.
The market experienced new entrants and
there are prospects that large banking institutions such as NBC and NMB
will enter the mortgage market as competition in the traditional banking
products continue to intensify.
Also, the construction of new houses by
the National Housing Corporation (NHC) over the next three years will
have a positive effect on the mortgage market as most of these will
likely be priced at affordable levels.
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 Tanzania.
Source Tanzania Daily News
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