02.04.2025 12:42
A first occurred in the housing loan sector after a long time. This change, which took place after the last 18 months, could affect the dynamics of the sector and customer demands. The average interest rate applied to housing loans opened by banks fell to 39.25% in the week of March 21, marking the lowest level in 18 months.
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The results of the disinflation program implemented by the economic management for 1.5 years are reflected in the data, while inflation, which rose to 71.6% in June 2024, fell to 39.05% in February. Following this decline, the Central Bank of the Republic of Turkey (CBRT) took action and reduced the policy interest rate, which is the one-week repo auction rate, by 250 basis points to 42.50% in the last Monetary Policy Committee (MPC) meeting. Thus, a total reduction of 500 basis points was achieved in the last two meetings.
The reductions made by the CBRT were also reflected in the interest rates of housing loans offered by banks. According to Central Bank data, the average interest rate applied to housing loans opened by banks fell to 39.25% in the week of March 21, marking the lowest level in 18 months. The previous low was 38.85% on September 8, 2023. The highest rate was 45.14% in the week of April 5, 2024.
MONTHLY INTEREST RATE DROPPED BELOW 3%
Until a few months ago, the lowest housing loan interest rate at banks was 3.05%, but this figure has decreased to 2.59%. Thus, the monthly payment for a 1 million lira loan with a 10-year term has dropped from 31,352 lira to 27,163 lira. The total amount paid has also decreased by 502,000 lira to 3,260,000 lira.
MORTGAGE SALES HAD HIT A LOW DUE TO HIGH RATES
Although interest rates are at their lowest in 18 months and have decreased to 2.59% monthly, this rate is still above the ideal figures seen by industry representatives, which are 1% and below.
Due to the high interest rates in recent times, the share of mortgaged housing sales in total sales remained at its lowest level since data began to be reported in 2013. This figure had risen to 39.8% in previous years, but fell to 10.7% in 2024, and increased to 14.7% in the first two months of this year.
"I BELIEVE THE DECLINE WILL CONTINUE THROUGHOUT THE YEAR"
Prof. Dr. Sefer Şener, a faculty member at Istanbul University’s Faculty of Economics, reminded AA correspondent that the economic management has provided certain conveniences, especially through public banks, to finance home buyers under more favorable conditions, stating, "I believe the decline in housing loans will continue in the remaining part of the year. Because, depending on the decrease in inflation, the policy interest rate will gradually decrease, and this decline will also pull back loan rates."
Reminding that market participants and the real sector's expectations for year-end inflation point to around 30%, Şener continued: "Looking at the table, it seems that by the end of this year, policy interest rates will also be in the range of 30-35%. If policy interest rates decrease to around 35% in line with expectations, housing loans will also decrease to around 29%. If the CBRT's forecast of 24% in the fight against inflation is realized, this will lead to policy interest rates dropping to around 28%, and housing loans falling to 25%."
Şener noted that an increase in housing sales is expected along with the decrease in loans, stating that if the amount of financing provided in loans is also increased, there could be faster increases in sales volumes.
"ALTHOUGH RATES ARE STILL HIGH, THIS DECLINE IS SIGNIFICANT"
Hakan Akdoğan, Chairman of the Real Estate Services Professional Committee of the Istanbul Chamber of Commerce (ITO), stated that loans are one of the most important factors affecting total housing sales, saying, "Loans are the most important factor that facilitates citizens' acquisition of housing and increases access to homes. As interest rates rise, the number of mortgaged sales decreases."
Pointing out that rates have decreased compared to 3-4 months ago and that this situation has reflected on mortgaged sales, Akdoğan used the following expressions: "Although rates are still high, this decline is significant. Currently, although the monthly rate has decreased to 2.59%, this figure should be a maximum of 1% for ideal housing purchases. The psychological threshold that motivates citizens is 1%. I believe that by the end of the year, monthly rates will decrease to around 2%. Low loans also positively affect rents. Because when the rate is low, the installments are also low. Citizens are paying monthly installments as if they are paying off a loan."
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