By Business Insider Reporter
Mortgage finance companies in Tanzania saw their profits fall sharply last year – dropping by 39 percent, according to the latest report from the Bank of Tanzania (BoT).
The BoT’s Banking Supervision Annual Report 2024 shows that although these lenders grew their total assets and issued more home loans, their profits went down mainly because of higher interest and operating costs.
Net profit for the two licensed mortgage financiers – Tanzania Mortgage Refinancing Company (TMRC) and First Housing Finance (Tanzania) Ltd – fell from TSh 2.8 billion in 2023 to TSh 1.7 billion in 2024.
The report notes that interest expenses rose by 2.3 percent to TSh 15.2 billion, reflecting higher borrowing costs, while operating expenses increased by 3.6 percent to TSh 9.9 billion, largely due to the expansion of their mortgage portfolios.
Despite the profit decline, the two institutions remain financially strong. Their total capital increased from TSh 54.1 billion in 2023 to TSh 59.8 billion in 2024, meaning they still meet the central bank’s minimum capital requirements.
The central bank says that their overall financial position also improved, with total assets rising by 2.6 percent to TSh 262.8 billion and the value of mortgage loans growing by 11.3% to TSh 197.6 billion.
However, the institutions still rely heavily on borrowing to fund their operations – 77 percent of their money comes from loans, while only 23 percent comes from shareholders’ equity. This shows a continued dependence on debt to finance mortgage lending.
The two licensed mortgage finance institutions in Tanzania offer both wholesale and retail mortgage loans, serving different parts of the housing finance market.
TMRC provides wholesale mortgage funding to banks and financial institutions, helping them extend more long-term housing loans to customers. The company plays a crucial role in strengthening the country’s housing finance system by ensuring lenders have reliable access to affordable, long-term capital.
Meanwhile, First Housing Finance focuses on the retail market, offering mortgage loans directly to individuals and families. Through its products, more Tanzanians are able to buy or build homes, supporting the government’s broader affordable housing agenda.
Together, these two institutions form the foundation of Tanzania’s mortgage finance sector, linking banks, real estate developers, and aspiring homeowners to make housing finance more accessible and sustainable.
Leasing sector on the rise
While mortgage financiers faced declining profits, financial leasing companies experienced an exceptional year.
In 2024, there were four licensed leasing firms with a total of 11 branches across the country, namely Alios Finance Tanzania Limited, Equity for Tanzania Limited (EFTA), PASS Leasing Company Limited, and Scania Credit Solutions Tanzania Limited
These companies offer asset-based financing that allows businesses and individuals to lease equipment, vehicles, or machinery without the need for large upfront payments or traditional collateral.
According to the BoT, total assets in the leasing sector jumped by 229 percent, while profits surged by 147 percent, reaching TSh 10.4 billion in 2024. The finance lease portfolio also expanded by 259 percent, driven by increased borrowing and demand for equipment financing.
This strong growth highlights the rising importance of leasing as an alternative source of capital, particularly for small and medium-sized enterprises (SMEs) in sectors like agriculture, manufacturing, transport, and services. The BoT says the performance underscores how leasing is helping businesses access modern equipment, boost productivity, and expand operations – all without taking on heavy debt burdens.
