Led by state lender Ziraat Bank, which announced an interest rate set at 0.98 for mortgage loans in partnership with the Real Estate Developers and Investors Association (KONUTDER) on Friday, the campaign for lower interest rates in the real estate sector has garnered support from other state lenders Vakıfbank and Halkbank to boost housing sales. According to people with knowledge of the matter, Vakıf Katılım and Ziraat Katılım, the participation banks of the state lenders, will also join the campaign. The mortgage plan allows buyers to borrow loans up to TL 500,000 ($93,500) with a 120-month maturity. The loans are applicable for housing sales from real estate developers working with these three state lenders.
One of the biggest hurdles for property investors was the high interest rates on mortgage loans, which could jump to as high as 3 percent and generally hovered around 2 percent. One percent interest rates on mortgage loans are considered a "psychological limit" for those who want to purchase homes, and loans under this limit are in high demand.The campaign will support the financing of firsthand properties and the sales of houses still under construction, enabling movement of the housing stock in the hands of real estate companies. On the other hand, some part of the housing loan payments within the scope of the application will be deducted from the commercial risks of the companies that are commercial customers of these banks, while the remaining part will provide cash flow to real estate developers. In this way, support will be provided to the banking sector, house manufacturers and those who want to become homeowners.
In addition to the campaign for low interest rates on mortgage loans, reductions on value-added taxes (VAT) and title deed fees have been implemented until the end of the year.
In late October, Treasury and Finance Minister Berat Albayrak announced a number of tax reductions on certain sectors to revive the economy. The rate of VAT in real estate has decreased from 18 percent to 8 percent over the last year; the campaign will continue until the end of the year and title deed fees have been cut to 3 percent from 4 percent. These campaigns have revived hopes of seeing new records in property sales for real estate developers.
In the first 10 months of the year, a total of 1.14 million house units were sold in Turkey. Last year, the total number came in at 1.4 million, a historic record.