Housing loan interest rates at their lowest in 18 months

ISTANBUL

The average interest rate on housing loans charged by banks dropped to 39.25 percent in the week ending March 21, marking the lowest level in 18 months.

The previous lowest rate was recorded at 38.85 percent on Sept. 8, 2023, while the highest rate was 45.14 percent in the week ending April 5 last year.

The rate cuts made by the Central Bank have been reflected in housing loan interest rates.

A few months ago, the lowest interest rate on housing loans was 3.05 percent, but this figure has dropped to 2.59 percent.

Consequently, the monthly payment for a 10-year housing loan of 1 million Turkish Liras dropped from 31,352 liras to 27,163 liras. The overall amount paid also decreased by 502,000 liras, bringing the total to 3.26 million liras.

Although interest rates are at their lowest in 18 months, this rate is still above what the representatives of the housing industry describe as “the ideal level of 1 percent or lower.”

Due to the high interest rates in recent periods, the share of mortgaged home sales in total sales remained at its lowest level since data reporting began in 2013.

While the share of mortgaged sales in total home sales had previously reached as high as 39.8 percent, it dropped to 10.7 percent in 2024. In the first two months of this year, however, it increased to 14.7 percent.

“The psychological threshold which motivates people to buy home is 1 percent,” said Hakan Akdoğan from the Istanbul Chamber of Commerce (İTO), adding that he expects monthly rates to decrease to around 2 percent by the end of the year.