Approximately 20 banks have decreased their home loan interest rates for various terms below 1 percent last week; however, the expectations have not been properly met, so the issue of a second discount came to the fore in the markets.The process has started with the campaign led by Emlak Konut, Turkey's biggest real estate investment trust, and the Association of Real Estate and Real Estate Investment Companies (GYODER), which provided finance options to customers for an easy buying process with installments. The installment sales have been made via two methods in 30 different projects. The 25 percent advance payment rate in home loans has been reduced to 20 percent as well with this campaign. In addition, payments have been made in two ways. The first payment option included a 20 percent advance payment, installments up to 120 months and a Consumer Price Index (CPI) raise added to the installments. The second option included a 20 percent advance payment, installments up to 120 months and a 0.7 percent annual late fee added to the installments. The campaign has paid off and sales worth $1.08 billion have been realized in the first eight days of the campaign.After the Emlak Konut's campaign, and following the Gülenist coup attempt on July 15, in order to spin the economy's wheels and keep the construction sector alive, President Recep Tayyip Erdoğan had called for the banks to drop their annual interest rates on home loans to 9 percent. Prime Minister Binali Yıldırım had announced that they started their operation to drop the interest rates on home loans.Banks backing these moves reduced their interest rates for various terms below 1 percent - 0.80 percent the lowest level - starting from the previous week.According to the Central Bank of the Republic of Turkey (CBRT), the total amount of home loans provided by the banks reached TL 151 billion as of Aug. 5. The said amount consists of TL 123 billion (81.7 percent) for loan periods from 61 to 120 months, TL 27 billion (18.2 percent) for periods between 13 to 60 months and TL 176 million (0.1 percent) for periods between one to 12 months.Maintaining a level above 1.10 percent prior to the campaigns, home loan interest rates were reduced to an average of 0.90 percent for loan periods from 0 to 24 months, to 0.96 percent for periods between 25 to 60 months and to 0.98 for periods between 61 to 120 months.Markets expect discount trend to continueConsidering the usage of the home loans for the periods between five to 10 years, even though the home interest loans dropped below 1 percent, experts indicate that annual interest rates still maintain a level below 11.5 percent.President Erdoğan's call for a discount toward 9 percent, Banking Regulation, Supervision Agency (BDDK) Chairman Mehmet Ali Akben's announcement that the interest rate discounts on home loans were just the beginning and would continue, in addition to the common usage of longer-term loans generated an expectation in the markets for the interest rates to drop to lower levels.Pointing out that interest rate discounts on home loans created a pressure on the profit margins, banking analysts said deposits remained limited due to the saving gap in Turkey and banks had difficulty in presenting a competitive rate regarding deposits.According to analysts, the central bank's decision to drop the required reserves protected the resource cost of the banks, and new steps can be taken accordingly. Alternatively, the central bank can provide separate funding to the banks for home loans, or via other macro-prudential measures implemented by the BDDK, risk parameters - the cost element on home loans - can be used in a way to relive the banks without conflicting with the Basel criteria.Turkish Economy Bank (TEB) led the way by dropping the interest rates to 0.99 percent for all loan periods between one to 10 years.Ziraat Bank reduced home loans interest rates to 0.82 percent for loan periods from one to 24 months to 0.90 percent for periods between 25 to 60 months and to 0.95 percent for periods between 61 to 120 months, while Halkbank dropped the rates to 0.80 percent for loan periods from one to 24 months, to 0.89 percent for periods between 25 to 48 months, to 0.90 percent for periods between 49 to 60 months, and 0.95 for the periods between 61 to 120 months.Vakıfbank, on the other hand, dropped its home loan interest rates to 0.80 percent for loan periods from three to 12 months, to 0.88 percent for periods between 13 to 36 months, to 0.90 percent for periods between 37 to 60 months, and to 0.95 percent for the periods between 61 to 120 months with a new campaign.Participation banks dropped their housing finance ratesAlbaraka Turk dropped its housing finance profit rates to 0.88 percent for periods between 0 to 24 months, to 0.97 percent for periods between 25 to 60 months, and to 0.99 percent for the periods between 61 to 120 months.Kuwait Turk offers finance rates to its customer with 0.89 percent for periods between 0 to 24 months, 0.99 percent for periods between 25 to 60 months, and 1.09 percent for the periods between 61 to 120 months.Vakıf Participation dropped the housing finance rates for future homeowners to 0.80 percent between 0 to 24 months, to 0.88 percent for periods between 25 to 60 months, and to 0.93 percent for the periods between 61 to 120 months, while Ziraat Participation reduced its rates to 0.82 percent between 0 to 24 months, to 0.90 percent for periods between 25 to 60 months, and to 0.95 percent for the periods between 61 to 120 months.