Five Kenya-based banks account for the lion share of the mortgage finance market in Tanzania, results of a study by the country’s sector regulator shows. Equity Bank Tanzania was the market leader in mortgage financing in the second quarter (March-June), accounting for 20% of the market share with outstanding loans amounting to $44 million (Tsh96 billion) issued to 66 customers.
The five banks, which also include Commercial Bank of Africa, NIC Bank Tanzania, KCB Tanzania and I&M Bank, had total outstanding loans amounting to $75 million (Tsh164 billion) by June 2016, according to a Bank of Tanzania (BoT) report issued on Thursday.
The success of the lenders is attributed to development of mortgage financing products in Kenya, with BoT affirming that Kenya and Rwanda’s mortgage markets are the most advanced in the region.
Mortgage debt to GDP ratio stood at 3.6% in Rwanda, 3.4% in Kenya, 0.8% in Uganda and 0.5% in Tanzania in the period under review, the report says. CRDB Bank limited, Tanzania’s largest bank in terms of deposits and loans, accounts for only six per cent of the total mortgage financing. The country’s second largest bank, National Microfinance Bank Plc (NMB), accounts for one per cent of the mortgage loans and the third largest bank, National Bank of Commerce (NBC), accounts for 0%.
However, Tanzania’s housing finance subsector was coming up with various financing mechanisms opening up. Commercial banks in East Africa’s second largest economy have in recent years become more interested in developing mortgage financing products as the number of lenders grew over the years from three in 2009 to 28 in 2016.
Interest rates on home loans also fell from an average of 22% to 16% in the same period, the study titled Tanzania Mortgage Market Update says. Diamond Trust Bank (DTB) is the latest entrant to Tanzania’s mortgage market in the second quarter of this year. It captured the market by storm, becoming only the second largest lender and accounting for 16% of the country’s market share.
“The number of mortgage lenders is expected to increase even further as more lenders continue to launch their mortgage loan products. During the quarter the mortgage market was dominated by five top lenders, who amongst themselves command about 67% of the mortgage market,” the report says.