Turkey sees surge in mortgage demand after state-run banks slash rates

Turkey is seeing a surge in demand for mortgages after state-run banks slashed rates on the loans.

Some 13,000 people have applied for 2.1 billion liras of loans since Ziraat Bank, Halkbank and Vakıfbank started offering the cheap mortgages two days ago, Dünya newspaper reported citing a joint statement by the banks.

Turkey’s three largest state-run banks cut loan costs to 0.99 percent monthly from about 1.5 percent. The move followed a government call for banks to reduce the rates for businesses and consumers. The central bank slashed interest rates by 425 basis points to 19.75 percent last month after President Recep Tayyip Erdogan sacked and replaced its governor.

“We expect the intense interest that citizens have shown to continue in the period ahead,” the three banks said of the surge in loan applications.

Turkey’s housing industry entered a slump late last year after a currency crisis forced the central bank to hike interest rates to defend the lira and arrest a surge in inflation. The inflation rate has declined to 16.7 percent from a 15-year high of 25.2 percent in October.