Turkey: Government proposes low mortgage rates to mid-income and fresh financing to constructors

Housing financing package for middle income group has been announced, with loan rates starting from 0.69% per month. According to announcement;

-Persons who will benefit from the housing campaign must not have sold a house in the last year in the province where they want to buy a house.

-Purchased residences cannot be sold for five years.

-Minimum down payment is 10%, maximum maturity is 15 years.

-A government-supported loan of TL25bn (US$1.3bn) will be given to contractors to build houses.

Treasury and Finance Minister Nureddin Nebati also provided the details of “My New Home Campaign” payment plans:

Assuming that 1 million TL loan is used;

-Citizens will pay 4 thousand 410 TL in installments in the first year with 0.69 percent.

-In the second year, households pay 5 thousand 400 TL in installments.

-In the third year, the installments are 6 thousand 480 TL.

-Installments increase to 10 thousand 315 TL in the 4th year.

-Payments increase to 12 thousand 697 TL in the last 8 years.

-Total payment amount reaches 1 million 909 thousand 570 TL, at the maturity.

-Those with a maximum income of 80 thousand TL in the 1st region, 65 thousand TL in the 2nd region, and 45 thousand TL in the 3 regions will benefit from the campaign.

The most important problem in the housing market is that the prices and rental values are above the accessible level, especially for the middle and low-income groups. In this respect, the campaign announced for housing accessibility should not increase the prices in the housing market. In terms of price mechanism, government underlined that pricing non-related to market realities will not be tolerated.

We consider the supply-demand balance of the market to be as important as the ease of financing in terms of access to housing for the middle and low-income segment, in terms of healthy prices. In this respect, subsidiary regulation comes to the fore in providing loans to builders in housing production.

Comparison of housing loan interest rates and first-hand house sales… Source: CBRT, TURKSTAT, Tera Yatırım

Comparison of housing loan interest rates and House Price Index… Source: CBRT, Tera Yatırım

Kaynak: Tera Yatırım- Enver Erkan
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