“Demand for housing and housing loans
remain extremely high but is constrained by inadequate supply of
affordable housing and high interest rates,” the Bank of Tanzania (BoT)
Quarterly Mortgage Market Report has stated.
Similarly, high value added tax on houses poses another challenge on affordability of housing to lower income earners.
The report says the government has
created a special task force at the Treasury to address the VAT issue
and discussions are at an advanced level with the matter set to be
tabled in the coming budget.
Most lenders offer loans for home
purchase and equity release while a few offer loans for self
construction which for the most part continue to be expensive beyond the
reach of the average Tanzanian.
The current housing deficit in Tanzania
is estimated at three million housing units with a 200,000 unit annual
demand. The first quarter of 2016, interest rates offered by mortgage
lenders ranged between 16 to 19 per cent.
The government has however expressed its
commitment to ensure loan interest rates are lowered in order to enable
many Tanzanians to acquire loans.
An increasing trend was experienced on
the 182 days T Bill rate from the third and fourth quarters of 2015 with
the rate rising to reach as high as 17.79 per cent towards mid February
2016.
A shift was experienced towards the end
of the first quarter of 2016 with the rate declining to reach as low as
14.68 per cent by mid - May 2016. The rising trend on the 182 days
T-Bill rate negatively affects all forms of long-term debt, including
mortgages.
Furthermore, factors attributed to the
rise of the growth rate is the increased awareness on mortgage loans
among borrowers as a result of various public awareness campaigns by
banks offering mortgage loan product as well as increased competition as
new lenders enter the market
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