Türkiye's banking watchdog has revised mortgage lending limits, a move sector experts say is a bid to make housing more accessible for middle-income households and revive demand in the lower and mid-tier residential property market.

The Banking Regulation and Supervision Agency (BDDK) said over the weekend that it had updated loan-to-value (LTV) ratios for housing loans, removing the distinction between new and second hand homes and raising borrowing limits, particularly for properties priced below TL 7 million ($160,000).

The changes also eliminate a long-standing disadvantage faced by buyers of second hand homes, where permitted mortgage ratios had been set lower than for newly built properties.

Industry representatives described the decision as a "loosening step" aimed at easing access to housing amid high prices and elevated borrowing costs.

Higher loan ratios for second hand homes

Under the new rules, mortgage limits for second hand homes have been significantly relaxed, allowing borrowers to finance a larger share of the purchase price.

Previously, buyers of second hand homes priced between TL 2 million and TL 5 million could borrow up to 60% of the property's value. Under the revised regulation, this ratio has been raised to 90%.

"For a long time, high housing prices and high mortgage rates have made access to housing extremely difficult," said Makbule Yönel Maya, general manager of TSKB Real Estate Valuation.

"With this regulation, we can say that the authorities are trying to make home ownership somewhat easier, especially for the middle-income group," she said.

Maya added that the changes are "a sign of easing."

"Previously, it was almost impossible to obtain a mortgage for second hand homes priced above TL 10 million," she said. "Now, buyers will be able to borrow up to 50% of the value for homes priced between TL 10 and TL 20 million. In this sense, we can speak of a relaxation."

Tighter limits for luxury segment

While borrowing conditions have been loosened for lower- and mid-priced homes, restrictions were tightened for higher-end properties.

For newly built homes valued at TL 20 million and above, the maximum mortgage ratio was cut to 40% from 60%.

The BDDK said the changes were introduced to ensure the "efficient use of financial resources in a way that supports lower-income groups."

Mortgage sales remain subdued

Rising interest rates, regulatory tightening and broader efforts by economic policymakers since mid-2023 to cool domestic demand have led to a sharp decline in mortgage home sales in recent years.

According to data from the Turkish Statistical Institute (TurkStat), the share of mortgage-backed home sales in total housing transactions fell to 14% by the end of 2025, down from 19% at the end of 2022.

Impact depends on interest rates

Maya said the latest easing could stimulate demand, particularly in large metropolitan areas where affordability remains a key challenge.

"House prices are currently rising below inflation," she said. "In a period where prices are relatively stable, improving loan-to-value ratios can find a response on the buyer side. Rents are high, and many people prefer to buy a home to live in rather than continue renting."

However, she cautioned that the effectiveness of the measure would largely depend on borrowing costs.

"The next critical phase is mortgage interest rates," she said. "The central is lowering policy rates. If those cuts are reflected in loan rates, the regulation will have a much stronger impact."

The Central Bank of the Republic of Türkiye (CBRT) slashed its policy rate by 100 basis points in January to 37%, extending its easing cycle.

Maya noted that when interest rates were lower, mortgage sales accounted for around 30% of total housing transactions.

"With this regulation, the current 14% share will increase, but it won't return to 30%. At best, it may rise toward 20%. Because interest rates remain high," she said.

According to the TurkStat data, mortgaged home sales peaked in 2013, when they accounted for 40% of total transactions.

Savings could shift toward property

Average monthly interest rates on 10-year housing loans currently stand at around 2.69%-2.79%, according to market data.

According to Maya, recent gains from gold and deposit interest could support housing demand.

"When you look at the underlying motivation, people want to own homes," she said. "Housing prices are currently not rising as fast as inflation, so households may prefer to realize their gains from gold or deposits in real estate."

Under the BDDK regulation, the rule that reduces mortgage limits by 75% for borrowers who already own at least one home, either personally, through a spouse, or via children under 18, will remain in place.