The Growth of Tanzania’s Mortgage Market
Tanzania’s mortgage market is experiencing steady growth, yet home ownership through formal financing remains a distant dream for many. High interest rates, expensive properties, and a lending system that caters to a narrow segment of the population continue to pose significant challenges.
According to the latest data from the Bank of Tanzania (BoT), the total value of residential mortgage loans reached Sh683.03 billion by March 2025. This marks a 3.6 percent increase from the previous quarter’s Sh659.3 billion. On an annual basis, the growth was 11.14 percent compared to Sh614.5 billion recorded in the first quarter of 2024.
While interest rates on residential mortgages have decreased from 22–24 percent in 2010 to between 13–19 percent today, the central bank acknowledges that these rates are still relatively high, negatively impacting affordability. The BoT highlighted this concern in its recent mortgage market update, emphasizing the need for further reductions to make housing more accessible.
The number of financial institutions offering mortgage products has also increased significantly. From just three in 2009, there are now 31 such institutions. The average mortgage size has climbed above Sh118 million (approximately $44,000). Despite this progress, many experts argue that current mortgage offerings remain costly and largely inaccessible to the average Tanzanian.
Dr. Wilhelm Ngasamiaku, an economist at the University of Dar es Salaam, described mortgages as “very expensive” and out of reach even for employed professionals. He noted that a typical three-bedroom family home in some developments costs between Sh200 million and Sh300 million—enough to build a larger, more customized home elsewhere.
“There is a real need for interest rates to come down, at least into single digits. That’s when we’ll begin to see meaningful inclusion,” he said.
Despite rapid urbanization and a growing middle class, the formal housing market has not adequately responded with products that match income levels. Tanzania faces a housing deficit of about three million units, with over 200,000 new homes needed annually. However, most available financing targets high-end developments and prime urban areas.
Andrew Kato, a real estate advisor, pointed out other inefficiencies in the market. Tenants often face demands for six to twelve months’ rent upfront with little room for negotiation, while buyers lack access to formal property valuations, leading to potential overpayment for underperforming homes.
Kato called for the establishment of a functional real estate regulatory authority to promote consumer protection, transparency, and fair landlord-tenant relations.
Christopher Makombe, a financial analyst, cited both structural and behavioral factors behind low mortgage uptake. Fear of long-term debt, lack of financial knowledge, and inflexible mortgage products with large down payments, valuation charges, insurance, legal fees, and bureaucratic procedures deter many potential borrowers.
Makombe urged market stakeholders and policymakers to increase flexibility and affordability. He suggested expanding refinancing options for banks at lower rates, introducing mortgage guarantee schemes to reduce credit risk, and simplifying application processes through digitization and cost reductions.
The Tanzania Mortgage Refinance Company (TMRC) plays a crucial role in market growth by providing long-term funding to Primary Mortgage Lenders (PMLs). By March 31, 2025, TMRC had lent Sh162.7 billion to 17 PMLs, accounting for about 24 percent of total outstanding mortgage debt. This indicates room for further refinancing expansion.
The BoT report also shows that the top five lenders control over 62 percent of the mortgage portfolio. CRDB Bank Plc leads with a 31.99 percent market share and a portfolio valued at Sh218.49 billion across 1,636 accounts. NMB Bank Plc ranks second with a 10.95 percent share, holding Sh74.80 billion in outstanding loans.
Azania Bank Plc has grown to third place, holding 8.34 percent with Sh56.95 billion, while Stanbic Bank Tanzania Ltd controls 5.46 percent with Sh37.30 billion across just 172 accounts, indicating higher-value loans per client. First Housing Finance Company Ltd holds 5.3 percent of the market with Sh36.23 billion in mortgage loans.
