Housing credit in Mozambique hits one-year low

Photo: O País

Housing credit in Mozambique fell in July to its lowest level in at least a year, contracting 4.1% in a single month to 7.189 billion meticais (98 million euros), according to central bank data. According to the Bank of Mozambique’s latest statistical report, the mortgage credit stock declined from 7.495 billion meticais (102 million euros) in June and dropped 14.3% compared to the 8.393 billion meticais (114 million euros) recorded in July 2025.

The decline maintains housing credit as a residual segment of bank lending in Mozambique, representing a weight of just 2.5% of the total 291.666 billion meticais (3.963 billion euros) in credit granted to the economy as of July.

This trend occurs despite a downward trajectory in interest rates over the last two years, as the central bank reports the average rate for one-year loans dropped to 21.27% in July—below the 23.04% recorded in the same month of 2025—though it remains at elevated levels for long-term financing.

Housing credit products offered by commercial banks in the country continue to demand substantial collateral, including property mortgages, mandatory insurance policies, and financing generally capped at 80% to 90% of the purchase or appraisal value, depending on the financial institution.

Earlier data from the Housing Finance Information Network indicates that Mozambique’s mortgage market remains small in international terms, accounting for less than 1% of Gross Domestic Product (GDP), reflecting constraints in accessing formal housing finance across the country.

Mozambique’s benchmark reference rate for credit remained unchanged in October at 15.5% for the sixth consecutive month, following three previous cuts this year, the Mozambican Association of Banks (AMB) previously announced.

Since January 2024, the benchmark rate, known as the ‘prime rate’, has gradually declined following six consecutive months at a peak of 24.1%. In January of this year, the AMB decided to cut the rate by 10 basis points to 15.70%, keeping it unchanged in February despite a policy rate reduction decided at the time by the central bank.

Identical 10-basis-point cuts followed in March and April, leading to the rate’s stabilization since May.

Fluctuations in the prime rate are tied to the monetary policy interest rate (the MIMO rate, which influences the prime rate’s calculation formula) set by the central bank to control inflation.

The Bank of Mozambique maintained its benchmark interest rate at 9.25% in September.

Source: Lusa