RELIEF IN HOUSING MARKET AS MORTGAGE RATES SET TO DECLINE

TMRC Chief Executive Officer, Mr Oscar Mgaya.

Mortgage rates are likely to go down further as Tanzania Mortgage Refinance Company (TMRC) lowered lending rate to financial institutions to a single digit after it secured funds at affordable rate.

TMRC Chief Executive Officer, Mr Oscar Mgaya, told the ‘Daily News’ that the refinancing rate went down to 9.0 per cent from 11.5 per cent which will enable financial institutions to lower housing loan interest to an average of 16 per cent from 22 per cent.

“Since we are refinancing financial institutions at lower rates, they are also expected to reduce the lending rate to customers,” Mr Mgaya said in an exclusive interview. TMRC is a private sector financial institution with a sole purpose of supporting banks to do mortgage lending by refinancing banks’ mortgage portfolios.

It said on its website that its prevailing interest rate is 9.0 per cent as it continues to enjoy the 5 per cent discount from World Bank Funds. The price is fixed at 9.0 per cent for member banks and at 10 per cent for non-members.

TMRC recently raised over 12bn/- after issuing a five-year bond through public, which was first tranche of 120bn/- bond following debt market rates to drop considerable. Mr Mgaya said they will continue to look for affordable sources of fund in a bid to lower further house interest rate to enable many to build houses through mortgage finance.

“The lower rates, I believe, will increase house loans, to give relief home builders from agony of using own pockets,” Mr Mgaya said. Azania Bank Senior Manager—Retail Banking, Jackson Lohay, said on average the commercial banks mortgage rates went down to 16 per cent from 22 per cent.

“Low interest rate for house will enable many to access house loans and finish construction on time since on average Tanzanians are building houses for five years using own funds…” Mr Lohay said during signing of Memorandum of Understanding (MoU) between TMRC and Tanzania Institute of Bankers last week.

He said since home builders are using their own means, construction takes more time than anticipated leaving them with little disposable income. TMRC report showed that six regions - Dar es Salaam, Mwanza, Arusha, Morogoro, Dodoma and Coast - control 98 per cent of total mortgage loans in the country.

The lower mortgage rates, also, are expected to increase the country’s ratio of GDP to house loan that currently stands below 1.0 per cent.

TMRC is a non-deposit taking financial institution, authorised by Bank of Tanzania (BoT) for the purpose of conducting its business, and by the Capital Markets & Securities Authority (CMSA) for the purpose of bond issuance.

Growth of mortgage market in Tanzania declined last year due to liquidity crunch in the banking system despite an increase in the number of players, according to a TMRC Tanzania Mortgage market report.

Daily News