Turks’ dreams of homeownership fade away as mortgage rates skyrocketed
After the successive interest rate increases made by Turkey’s Central Bank were reflected on mortgages, Turks’ dream of home ownership faded away. Loans of two million liras require a monthly repayment ranging between 60,000 and 70,000 liras while the minimum wage is 17,002 liras.
Duvar English
The policy interest rate hike, reaching 50 percent in March after successive phase increases by Turkey’s Central Bank, has led to astronomical monthly mortgage repayments.
The extremely high price increases experienced in the construction sector in the last two years have also caused serious problems on the production side. Contractors prefer to postpone the housing construction for the low and middle-income groups with the anxiety that the houses will not be sold.
According to the Central Bank's housing price index for March, house prices increased by 5.4 percent monthly and 132.76 percent annually. The average price of a 120 square meter house in Istanbul exceeded four million Turkish liras ($124,000).
Turkey’s minimum wage is 17,002 liras ($526) and it melts down every month due to the severe depreciation of the lira.
As of April 11, the monthly interest rate for a two million lira ($62,000) mortgage at the state-owned Ziraat Bank was 3.89 percent. With a total payment of 9.44 million liras ($292,000), the monthly installment amount for the loan spread over 120 installments was approximately 78,000 lira ($2,400).
The monthly interest rate for a two million lira home loan at Garanti BBVA, one of the largest private banks in the country, was 3.63 percent. The monthly installment amount of the loan, which has a total payment of 8.85 million, was approximately 73,000 lira with a 120-month maturity.
The mortgage from İşbank, with a loan amount of two million liras and a monthly interest rate of 3.07 percent, entailed a total payment of 7.6 million liras. Spread over 120 months, the monthly installment amount for the loan was near 63,000 liras.
For the mortgage from international ING Bank, with a loan amount of two million liras and a monthly interest rate of 3.64 percent, the total payment amounted to 8.8 million liras. Spread over 120 months, the monthly installment amount for the loan was approximately 74,000 liras.
Banks offered varying monthly deposit returns on one million liras, ranging between 45 and 55 percent. Consequently, depositors received monthly interest amounts ranging from 20,000 to 45,000 liras.