Regulator introduces new cap on some housing loans

ANKARA

The Banking Regulation and Supervision Agency (BDDK) has announced a decision to tighten the conditions for some housing loans as part of the measures aimed at strengthening macro-financial stability.

The loan-to-value ratio has been tightened by 75 percent and set at 22.5 percent from a previous 90 percent for those who want to buy a second home.

However, there will be no changes to the existing loan-to-value ratio for those buying their first homes.

The new cap will apply if buyers, their spouse, or their children under the age of 18 already own at least one property, the BDDK said.

“For instance, if consumers want to buy a second home, they will be eligible for a loan only up to 22.5 percent of the property’s value,” it explained.

The risk weight on those loans will also be higher, according to the regulator. The 150 percent risk weight will apply in capital adequacy calculations instead of the regular 35 percent, the BDDK said.

The volume of housing loans stood at 403 billion Turkish Liras as of Aug. 18, remained almost unchanged from a week ago, according to the data from the Central Bank.

Housing loans grew by 22.4 percent since the end of 2022 and increased by 24.9 percent from a year ago.

From January to June, mortgaged home sales fell more than 28 percent from the same period of 2022 to 136,000, while total residential property sales plunged nearly 18 percent annually to 675,000.