Turkey introduces cheaper mortgages for mid-income citizens

Turkey Finance Minister
(Turkish Treasury and Finance Minister Minister Nureddin Nebati)

Turkey announced a cheap mortgage package for middle-income first-time homebuyers, as the government is trying to address problems in the real estate market of the country where the prices and rents hiked above the accessible level.

Mortgages with lower rates and longer maturities will be offered to middle income Turks looking to buy new housing, Turkish Treasury and Finance Minister Minister Nureddin Nebati told a news conference on Jan. 4.

The minister said that mortgage loans with amount up to 5 million lira ($266,823), will have up to 15 years maturity and rates will start from 0.69%. The minimum down payment rate is determined as 10%.

“We prepared this program for middle-income citizens with advantageous rates, three-year finance ministry support in payments, and a household income-based payment plan,” Nebati said.

“Citizens who want to buy a house in Istanbul, Ankara, Izmir, Antalya, Bursa, Mersin and Mugla will have to have resided there for the last year, and they should not own a house, and they should not have sold a house in the last year,” Nebati noted.

The loans with favourable rates will only be valid for new residences, before, during, or after their construction.

The citizens will benefit from the campaign if they do not own any house and cannot sell the new housing for five years. Contractors that promise to build new housing will be able to have credit guarantee fund-backed access to financing of some 25 billion Turkish lira, Nebati added.

Last year, the government launched a major social housing project to build tens of thousands of homes for low-income groups. Some 5 million people applied to buy a house from the social housing project under which 500,000 homes will be developed between 2023 and 2028, Hurriyet reported.

Residential property prices increased by 188% in October 2022 y-o-y, recent data from the Central Bank showed. Inflation touched a year-on-year high of 85% in October, but while other central banks around the world have raised interest rates to help lower inflation, Turkey continued to buck the trend.

With reporting by Hurriyet, Reuters, Xinhua