While Central Bank’s possibility of reducing interest rate is growing, it is foreseen that in two or three months mortgage loans’ interests will be lower than 1%.
Markets held their breath an waiting for April’s Monetary Policy Committee (PPK) meeting which will be held tomorrow under the new governor of Central Bank, Murat Çetinkaya. While reduction of interest decision is taken for granted, discussions are mostly about interest rate corridor’s high band would be 0.50 points or 0.75 points.
There are even ones telling that “there should be 1 point of discount in higher band.” According to news published on Haberturk, while real sector notably construction is awaiting how a possible reduction of interest might reflect on commercial credits impatiently, consumers are awaiting how much of a reduction will be supported with this decrease, especially in mortgage loans.
Since mortgage loans have been approximately 1.20 or 1.25 % which is high. Under these circumstances, while people are postponing resident purchase, construction sector is complaining about the decrease of sales. Real estate representers say that 1% interest is a psychological line and when interest rates are lower than this rate, resident sales are decreasing. But how will the Central Bank’s expected interest rate cut will affect mortgage loan interests?
Global circumstances are in our favor
Will mortgage loan interests be lower than 1% ? First of all, it is important to mention that interest rate cut for mortgage loan is not only about Central Bank’s interest rate cut. But it is more likely that in the bank giving the lowest interest now which is 1.13 %, to be lower than 1% in summer. Bankers state that it is not enough for Central Bank to give interest rate cut only since the credit deposit rate is around 120%, hot money entry should continue.
Bankers who expect both headline and core inflation to decrease for another two months, are attracting notice to global circumstances which are in favor of emerging markets. Bankers are stating within the following two or three months, mortgage loan rates will be lower than 1% but global circumstances will determine if these rates will be permanent or not.
Resident Sales Increased 7% in February
According to Turkey Statistics Institution data, while resident sales increased again in February, according to the same month of last year 7%, and the month before 20.2% increase have been recorded. Resident sales, which was eighty four thousand five hundred fifty six in January, increased to one hundred one thousand seven hundred three.
Basel III criteria are encouraging to mortgage loan.
Basel III, criteria which stepped in at the end of March, bankers state that instead of bonded loan, it encourages to give mortgage loan. Bankers also state that estate loans are depended on mortgage and smooth loans.
Among mortgage loans, bankers state that estate loans reserve a big place, also state that banks might be more desirous to estate loans in the following term for this. For this reason bankers stated it is a very high possibility for the real estate loan interests to be lower or very close to 1%, also telling what matters is how long it will remain around these rates.
Bankers said it will be a relief for estate loans when commercial credit rates will decrease from around 15 or 16% to around 13%, deposits to 11% from 13%. Also they attract notice to the importance of continuing foreign capital inflows to be in full flow.
Loan Interests Will Decrease
Yigit Bulut who is the chief advisor of president of the republic, consumer loan interests will decrease next week and public banks must be faster in rate cut. In his assessment on TRT News, Mr. Bulut said “from next week on consumer and estate loan interests will decrease 0.5 – 1.0 points.” Mr. Bulut foresaw in two weeks, cheaper money will be found in Turkey. Mr. Bulut said that the new governor of Central Bank can take the office with 50 – 75 points of decrease in high band of interest rate corridor. Monetary policy committee will gather tomorrow.