Mortgage interest rates in Türkiye have fallen to their lowest level in approximately 2.5 years, prompting expectations of increased loan demand. With rates declining to as low as 2.49%, a ₺2 million mortgage has become significantly cheaper compared with previous months.
At a 2.49% interest rate, the monthly installment for a ₺2 million mortgage with a 120-month maturity drops to around ₺52,000. Previously, at a 2.81% rate, monthly payments exceeded ₺58,000. As a result, the total repayment amount has decreased from over ₺7 million to approximately ₺6.3 million, creating a difference of nearly ₺700,000 in favor of borrowers.
The recent interest rate cuts by the Central Bank of the Republic of Türkiye have started to reflect in housing loan rates. According to a report by Duygu Erdoğan of Milliyet, banks are also launching special campaigns to increase their share of the mortgage market.
Bank Campaigns and Current Rates
For first-time homebuyers, mortgage rates have fallen to as low as 2.49% at some banks. Regardless of whether the property is new or second-hand, the lowest available rate is around 2.69%, while many banks have reduced rates to the 2.75–2.80% range.
Loan Conditions Based on the Property
1) First-Time Homebuyers
First-time buyers can use up to 90% loan-to-value (LTV) depending on the property value and its energy efficiency class.
New Homes – Maximum Loan Ratios (%)
| Property Value | Energy Class A | Energy Class B | Other |
|---|---|---|---|
| Below ₺5m | 90 | 85 | 80 |
| ₺5–10m | 80 | 75 | 70 |
| ₺10–20m | 70 | 65 | 60 |
| Above ₺20m | 60 | 55 | 50 |
Second-Hand Homes – Maximum Loan Ratios (%)
| Property Value | Energy Class A | Energy Class B | Other |
|---|---|---|---|
| Below ₺1m | 90 | 90 | 90 |
| ₺1–2m | 70 | 65 | 60 |
| ₺2–5m | 60 | 55 | 50 |
| ₺5–10m | ₺3m | ₺2.75m | ₺2.5m |
2) Buyers of a Second Home Face Tighter Rules
Before August 2023, buyers could obtain mortgages covering up to 90% of the property value regardless of how many homes they owned. However, the Banking Regulation and Supervision Agency (BDDK) introduced a 75% restriction on mortgage lending for second-home purchases. Properties under urban transformation projects are exempt from this rule.
Lower Payments, Rising Sales
With the general downward trend in interest rates, the average mortgage rate fell to 37.63% last week, marking the lowest level in 28 months. Over the past 2.5 years, high interest rates had significantly slowed housing demand, with rates at times exceeding 3.60%, reaching record highs.
Currently, the lowest mortgage rate of 2.49% is offered by a public bank, while three private banks are providing campaign rates of around 2.65%. As a result, the monthly installment on a ₺1 million, 10-year loan has declined from ₺31,352 to ₺26,273, reducing the total repayment by ₺609,000 to ₺3.153 million.
Despite previously high interest rates, housing sales are nearing record levels. While cash purchases remain prominent, data shows a notable increase in mortgaged sales. In the first 10 months of the year, mortgaged home sales rose by 64% to 186,020 units, accounting for 14.4% of total home sales—meaning 14 out of every 100 homes were sold with financing.
Outlook
Experts note that a strong acceleration in mortgage demand typically begins when rates fall below 1%. In the current high-inflation environment, it is expected that improving economic conditions could first bring rates below 2%. There are also growing expectations that the restrictive rules on second-home buyers may eventually be eased or lifted.
Source: Patronlar Dünyası/ Prepared by: İlayda Gök