Financing affordable and adequate housing in Tanzania over 20 percent to between 16 and 19 percent but unaffordable to many po­tential mortgage borrowers. So far, the government has addressed some of the supply-side obstacles, which have only succeeded in attracting primary mort­gage lenders to participate in the mort­gage market and helped to somehow reduce the interest rates, though they remain unaffordable. The government may also wish to consider demand side measures, like establishing a mortgage guarantee scheme or mortgage de­fault insurance. These tools could be used to further reduce lending risk and subsequently contribute to lowering mortgage lending interest rates and enhance borrowers’ affordability. 5. Credit availability through housing microfinance Housing microfinance addresses a seg­ment of the market that mortgage lenders are unwilling to serve- the ap­proximately 70 percent of the urban residents who build incrementally. This group is ineligible for credit finance for housing related investment from the mortgage finance system for various reasons, including the lack of regular and verified income, as well as a lack of collateral(UN-Habitat, 2008). My 2006 study on housing conditions, borrow­ing and lending for that group of urban residents in three informal settlements in Dar es Salaam shows that house­holds self-financed their incrementally constructed houses. Sources of finance were mainly savings, sale of assets, sup­port received from family members, rel­atives and friends. However, it was es­tablished that if institutional loans were available, 87 percent of the households would borrow to finance their house construction. Majority of them(77 per­cent) would borrow sums not exceed­ing Sh. 10 million, equivalent to US$ 8,000 to finance house construction (Nnkya and Lerise, 2007) 10 . However, as majority households(65 per cent) were engaged in the informal sector, earning irregular income; and most of them had no title deed(44 percent had a five years residential license); the ap­propriate source of institutional credit would be housing microfinance 11 10 The case studies were purposely selected from among the informal settlements; Mwana­nyamala, Buguruni and Changrarawe located in the Dar es Salaam City’s three municipalities; Kinondoni, Ilala and Temeke respectively. 11 UN-Habitat establishes that housing microfinance institutions(MFIs) ofsfer small loans rang­ing from$1,000 to$5,000(UN-Habitat, 2008). Loan terms are between one and eight years, but mostly at the lower end of this range. Security conditions demanded by the lender vary depending on local circumstances. They may be like those demanded for enterprise loans, such as group guarantees, para-legal documents to the property, or other non-mortgage collateral. 111