Loan drop signals economic slowdown

ISTANBUL - Hürriyet Daily News

The volume of home loans was down in the second quarter of this year. REUTERS photo

Some 2.25 million Turkish citizens took out 27.2 billion Turkish Liras in consumer and housing loans in June, which represents an 11 percent drop compared with the same period last year, according to the Turkish Banks Union’s (TBB) June 2012 consumer and housing loans report, released Sept. 4.

Loan amounts also plummeted 20 percent from the April-June 2011 period, according to the report’s findings. “The economy has been sluggish through the first half of 2012, with growth at about 3 percent; and the fall in loans, along with many other indicators, such as declines in capital and consumption goods imports, auto sales, and tax collections,” Standardünlü economist Serkan Gönençler told Hürriyet Daily News yesterday. The economy could slow down even further in the third quarter of the year, he said.

Asked why there has been an 11 percent drop in the number of people taking out loans, Gönençler said: “Now fewer people are willing to buy a 42-plus inch plasma television or change their Renault automobile for an Audi or BMW. Fewer people believe they will earn more in the future, so they have less confidence in the economy.”

Slight pick-up

There has, however, been a slight pick-up in loans since the January-April period, according to the TBB. The number of citizens taking out loans was up 10 percent from the previous three months, and loan amounts were also up 23 percent in the same period.

Looking at the specific types of loans consumers are seeking, consumer loans took the lead at 64 percent, followed by housing loans at 25 percent and vehicle loans at 6 percent. Some 1.9 million people took out consumer loans, amounting to 17.4 billion Turkish Liras. A total of 87,843 housing loans totaling 6.8 billion liras and 43,151 vehicle loans amounting to 1.5 billion liras were made, according to the report. In year-over-year comparison, vehicle loans plummeted 15 percent, housing loans were down 27 percent and consumer loans were down 18 percent.

In terms of loan repayment periods, customers preferred 49 to 72-month pay-back periods, followed by the 25 to 36-month window and 73-month and more re-payment options.