Mortgage Interest Rates at Their Lowest Level in 28 Months

Continued Decline in Housing Loan Interest Rates

In Turkey, with the steps taken to ensure economic stability, housing loan interest rates continue to decline. According to the data announced by the Central Bank of the Republic of Turkey (CBRT), during the week of December 12, 2023, the average interest rate applied by banks for housing loans dropped to 37.63%, reaching the lowest level in the last 28 months.

Dynamics Behind the Decline in Interest Rates

With the effects of the disinflation program implemented by the economic management, inflation, which rose to 71.6% in June 2024, decreased to 31.1% in November 2024. The policy interest rate, the one-week repo auction rate, was reduced by 150 basis points to 38%.

Monthly Interest Rate Drops Below 2.5%

Last year, the lowest housing loan interest rate was 3.05%, but this year it has reached 2.49%, leading to a decrease in monthly payments. For example, for a 10-year term loan of 1 million lira, the monthly payment decreased from 31,352 TL to 26,273 TL, reducing the total payable amount from 3,153,000 TL to 2,544,000 TL.

Change in Bank Strategies

Prof. Dr. Ali Hepşen, a faculty member at Istanbul University, stated that banks are willing to reopen the housing loan volume in a controlled manner. According to prepared reports, approximately 7.5 percentage points of decline in housing loan interest rates has been observed since April 5, 2024.

Interest Rates Still High

Prof. Dr. Hepşen noted that housing loan interest rates are still high at the moment and that these declines will not create widespread demand. He emphasized that credit borrowers have not yet made a return, but a "small loan" has created a new profile.

Increase in Mortgaged Sales Expected

President of TÜGEM, Hakan Akdoğan, pointed out that the decrease in loans is reflected in mortgaged sales. Despite a 53.5% increase in mortgaged sales, the share of credit sales remains only at 13.3%. Many people who do not want to pay high rent are choosing to become homeowners with the current rates. However, Akdoğan believes that an interest rate below 1% would have a significant impact on sales, while current rates still remain above 2.5%.