Housing loan interest rates at their lowest level in 2 years

The Central Bank of the Republic of Turkey's decision to cut the policy rate by a total of 6.5 points to 39.5 percent over its last three Monetary Policy Committee meetings has also been reflected in banks' loan interest rates. This development caused housing loan interest rates to fall to 37.91 percent as of October 17, marking the lowest level seen since September 1, 2023.

The monthly interest rate on housing loans has declined to 3.1 percent. The compound interest rate, which rose to 48 percent levels in June, had seen 4 percent on a monthly basis. However, some banks have reduced this rate to as low as 2.6 percent through campaigns they have launched. These reductions have significantly decreased the financial burden on borrowers. For example, when a 1 million lira housing loan with a 60-month maturity is taken at a 2.6 percent interest rate, the monthly payment becomes 33 thousand 94 TL, while the total repayment drops to 1 million 985 thousand TL. When the same loan is taken at a 4 percent interest rate, the monthly payment reaches 44 thousand 201 TL, and the total payment reaches 2 million 652 thousand TL. This drop in the interest rate provides a total savings of 667 thousand TL.

INCREASE IN LOAN VOLUME

The reductions in interest rates by banks have also increased loan volume. According to data from the Banking Regulation and Supervision Agency, the housing loan volume, which was 577.5 billion TL on June 5, rose to 638.8 billion TL on October 17. During this period, there was an increase of 61.3 billion TL in housing loans.

According to data from the Turkish Statistical Institute, 150 thousand 657 housing sales were realized in September, marking the highest September sales of all time. Mortgaged housing sales increased by 34.4 percent compared to the same month of the previous year, reaching 21 thousand 266. In the January-September period, mortgaged housing sales reached 162 thousand 493, an increase of 76 percent.

DECLINE IN COMMERCIAL LOANS AS WELL

The Central Bank's interest rate cuts have also led to a decline in commercial loan interest rates. As of October 17, commercial loan interest rates fell to 52.55 percent, reaching their lowest level since December 22, 2023. Commercial loan interest rates, which exceeded 70 percent in April 2024, are on a downward trend, although they do not fully meet the expectations of industrialists. Vehicle loan interest rates have also dropped to 36.3 percent, the lowest level since June 14, 2024.