Latest News from the Turkish Property & Mortgage Market

Interest for mortgage to be paid off through taxes

Important alterations have been made to the mortgage system soon to be brought to Turkey. According to this arrangement, those with a regular income will be able to have their mortgage rates deducted from their tax payments.

Urban projects, cooperative home buyers and TOKI home-buyers will also be able to benefit from this system of repayment. In addition to this, the house buyer will be able to choose between flexible and fixed rate mortgages, and there will be limitations as to the age or district of the property. Here are some of the important changes outlined in the new arrangement:

Interest to be deducted from taxes:

According to the new arrangement, those with a regular income, borrowing up to 100 thousand YTL, will be able to repay their mortgage interest through taxes. Property Financing Institutions will be set up in order to provide longer periods of repayment and better rates for buyers.

Fixed-rate interest to be lifted:

Repayments of mortgages will be flexible and determined by nationally and internationally accepted indexes. Within this framework, there will no longer be an obligation for fixed-rate mortgages restricting market expansion. Property financing institutions will be under obligation to provide the consumer with a “Pre-agreement information pack”, providing information about the rates they offer. Consumers will be free to decide whether or not they accept these conditions.

Information taken from Hurriyet News 13 March 2010

Turkey Mortgage Agency Expecting 17-18 Percent Growth in Sector In 2010

A mortgage agency with Turkey's Garanti Bank, the country's second largest private bank by asset size, says it is expecting a growth of 17 to 18 percent in 2010 in nation's mortgage sector.

"The sector is giving away 1000 to 1200 individual mortgage credits daily. With the pace on, the sector is likely to reach 50 billion Turkish liras [nearly 32.6 billion USD] this year," Cemal Onaran, head of Garanti Mortgage, told reporters on Friday.

Onaran said 530 thousand new houses were sold in Turkey in 2009, marking a minimum of 10 percent rise over 2008.

In 2009, mortgage sector saw a 13 percent boost over the previous year to reach to some 42.5 billion Turkish liras.

Onaran said he expected house prices to rise about 8 to 10 percent in 2010 in the Turkish market.

Taken from Turkish Daily Mail

Banks boom in Turkey without government aid

In Turkey, bank profits have rose more than 40 percent last year, though at first glance that might not seem exceptional. After all, profits surged at US banks too, spurring a stock market rally that has wiped clean most of the losses from 2008's economic meltdown. But there's a difference: Turkey's banks posted those profit gains without any government assistance.

Profits for the entire Turkish banking industry totalled USD 10.5 billion for the first nine months of 2009, according to government data. At a time when the recession has hammered many European banks, Turkey's financial institutions weathered the crisis remarkably well.

The Turkish government restructured the financial system, boosting the banks' capital requirements and raising the mandated ratio of capital to risky assets to 12 percent from 8 percent.

Another difference: Turkish banks had almost no exposure to subprime loans or derivatives. The result is that Turkish banks now have some of the world's strongest capital structures. Those capital reserves, and the absence of risky lending practices, helped shield them when the recession hit. For example, Garanti Bankasi, one of the country's largest lenders partially owned by General Electric, maintains a capital ratio of almost 18 percent, according to the bank's financial filings, far higher than most US banks.

Taken from: Invest in Turkey (Houston Chronicle)

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