The interest rate on housing loans is at its lowest level in 28 months.

Continued Decline in Housing Loan Interest Rates

With the steps taken to ensure economic stability in Turkey, housing loan interest rates continue to decrease. According to the data announced by the Central Bank of the Republic of Turkey (CBRT), the average housing loan interest rate applied by banks fell to 37.63% during the week of December 12, 2023, 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 rate, which is the one-week repo auction rate, was reduced by 150 basis points to 38%.

Monthly Interest Rate Falls Below 2.5%

The lowest housing loan interest rate, which was 3.05% in the middle of last year, reached 2.49% this year, reducing monthly payments as well. For example, for a 1 million lira loan over 10 years, 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.

Banks' Strategy Change

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

Rates Still High

Prof. Dr. Hepşen expressed that the current housing loan interest rates remain high and that these declines will not create widespread demand. He emphasized that borrowing buyers have not yet provided a return, but a "small loan" has created a new profile.

Increase in Mortgaged Sales Expected

TÜGEM President Hakan Akdoğan pointed out that the decline in loans is reflected in mortgaged sales. Although there has been a 53.5% increase in mortgaged sales, the share of sales with loans remains only 13.3%.

Many people who do not want to pay high rent prefer to become homeowners with the current rates. However, Akdoğan believes that an interest rate below 1% would have a significant impact on sales. Current rates are still above 2.5%.