Will Mortgage Rates Fall?

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Last 3 months, the Central Bank (CB) cut interest rates by 125 basis points but unfortunately it could not reflect to the interest rates of mortgage of banks. This reduction of residual sector stakeholders who want to reflect on the real rate, so that citizens expect there will be less costly to the home owner.

Because of the decreases band of the interest rate corridor as 125 points by Republic of Turkey Central Bank (RTCB), has not been reflected to the mortgage rates of banks yet.

Moreover, the going expectation for rate cuts of Banks caused a recession in sector. The across of Turkey, in April 106.348 housing has sold. The number of the selling housing of last month had decreased  9% when we compared with the same month of the 2015.

‘It caused a serious decline in sales of high mortgage interest rate’

Consumer Affairs Association Vice President and Head of the Real Estate Commission who Hatice Kolçak says ‘after the interest cut of Republic of Turkey Central Bank (RTCB), the interest rates has to decrease slowly, so consumers are waiting for that’

Kolçak added ‘for a long time the interest rates is 1.15 % in navigating levels, so she underlined that close their business who wants to get house. Because of the not interest fall, home sales are adversely affected. The consumer demand who gets second hand house always is hunging up. In mortgage rates, really was a decline each every month.’

She says ‘the construction firms who sells the new houses with their time draft for trying to overcome this situation. So it is not sustainable.’

Kolçak adds that ‘the selling of housings are about 10.9 % decrease when we compared to the previous year. The most reason of the decrease is of course higher interest rates. Indeed, the decline of the selling which is mortgage houses are about at rate of 27.4. For months, significantly the sale of mortgaged housing officially is going to start the alarm in April. Kolçak, in addition expressed ‘if the interest rates become the below of 1%, the sector will be more live and moving.


Banking should provide financing to the Consumer

Asian Side Construction Contractors Association President who melih Tavukçuoğlu says: ‘the interest rates of Housing was lower levels than today, he remind that the rates was decrease until 0.60 % and then, this issues indeed impacted sales of housing and it made the home like a investment tool.’

He also said that: ‘then these rasing rates was not a further stroke 1%. By the way, Tavukcuoğlu added that: in May, there was a small decline like 0.02 % according to April.’

Tavukçuoğlu evaluated: ‘When we examine the mortgage rates of the banks, in 120 months term, interest rates is seems like 1.05%. Moreover, avarage interest is also 1.18.’ So, the mortgage loans are very expensive.’ In addition, He added: ‘ Banks provide to give the credit easily to the consumers, but the rates of the interest are very high.’

When we look at the avarage of 3 months, the interest rates had fallen in the general of 2015. However, in general decline of interest, this rate is very small for consumers. Indeed, for selling of housing, we are entering to a death season. Ramadani, Summer holiday… And moreover, the situation in our country quite affects the sellings. In April, the interest rates effected to the declining of houses selling. Consumers afraid from that and not buy the house.

Interest rates on housing loans also reflected the thoughts of the consumers do not buy a house now. So, housing receiever retreat due to expectations and the banks has to realize quickly for converting this real.

Tavukçuoğlu adds: ‘the most important step to accelerate the housing sales is declining of the interest rates below the 1%. The big constructions firms which make branded housing projects has already provided great convenience. However, the banks should be basis institution.


‘Mobility for Selling of Housing’

Istanbul Constructors Assosiaciton President who Nazmi Durbakayım said that: ‘the real estate sectors is very sensitive when the mortgages rates decline. In short term, the hesitant requests became to real, that means the selling of houses has more chance.’

Many housing products of Sector, before the declining of the interest rates Republic of Turkey Central Bank contribute to the mortgage rates of the finance sector. So, they support to decline rates.

Durbakayım adds: ‘if the interest rates continue to be below 1%, the private sector contribute for the stability of sector.’


‘Who get house without increase price, then they can configure loan’

The Chairman of Macro Constructors who Ercan Uyan tackle this issues from another perspectives and said that: ‘the decision which declines of interest rates by Republic of Turkey Central Bank over the mortgage loans is effecting as symbolic and supported that real estate sector had declining of interest rate its budget.

Especially, In the selling of houses, the firms are doing some private treaties with banks and try to decline the rates. Moreover, He added: ‘Remember, there is inverse proportion between the rates and price, when one of them is high, another one is fall or vice versa.’

Uyan also adviced that: ‘If investors try to invest any projects which like low price, at the second step, they decline their financial costs with the declining of interest rates.’

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