Arusha — Mortgage financing is set for expansion following the recent passing by the National Assembly of the Mortgage Finance Bill, President Jakaya Kikwete affirmed yesterday.

"This expansion will help to provide funds for acquisition of low cost housing and not just for mansions and skyscrapers," he said when opening the 14th annual conference of financial institutions here.

He directed concerned authorities to ensure that the regulatory framework was put in place for mortgage financing, which he described as "effective and robust."

The president cautioned that while the bill is put into operation, Tanzanians should be mindful of the current financial crisis in developed countries which originated from sub-prime mortgage lending.

He did not say he has assented to the bill yet, and if other regulatory elements to be set forth by the minister will be completed soon for an assented bill to be promulgated as law.

"The current financial crisis that began in mortgage finance in the US has not only raised the lending risk and the attendant increase in interest rates.

It has also reduced the probability of success through credit rating as the crisis has shaken the credibility of the rating agencies themselves," he further stated.

This, he emphasized, underlines the importance of looking inside for long term sources of infrastructure financing.

"In this regard, the challenge for the financial system is to provide a mechanism for facilitating such financing from within the country," he told senior officials of commercial banks and other financial institutions.

Access to long term finance is still difficult to low income and middle income segments of the society, especially mortgages, infrastructure and venture capital areas.

"Our financial system is yet to develop an accessible and reliable mechanism to meet the demand for mortgage financing," he declared, adding that the government was preparing investment guidelines after the Social Security Act was approved by Parliament in recent months.