Turkey offers inflation-linked mortgages in housing slump
Turkey’s state-run banks began offering consumers inflation-linked mortgages as the government sought to reverse a slump in the housing market.
Halkbank and Vakifbank said they were joining the scheme, recently announced by Ziraat Bank, Turkey’s biggest bank by assets. The loans are available from today, Takvim and other local newspapers reported on Tuesday.
The banks are offering the new loans during a crisis in the housing market. Home sales fell an annual 31 percent in May, dropping at the fastest pace this year. Sales via mortgages slumped an annual 86 percent to 5,231 units, the Turkish Statistical Institute said on Monday.
Banks will only make a profit margin of 0.19 percentage points over inflation, Takvim said. A house-buyer will consequently save 150 liras ($26 per month) on a loan of 250,000 liras over 10 years, the newspaper said.
Borrowers will be able to choose whether to index their loans to inflation over a three, six, or 12-month period before rates are set to the latest inflation figure.
Turkey’s inflation rate has fallen to 18.7 percent from 25.2 percent in October, the highest level in a decade and a half. The government says the rate is set to decline to single digits later this year.
Ziraat Bank and Halkbank are controlled by Turkey’s sovereign wealth fund, which is chaired by President Recep Tayyip Erdoğan.