Using loans to buy dwellings drops by third on high interest

ANKARA

Higher interest rates have curbed house purchases with mortgage loans. DHA photo

Higher interest rates and a weaker Turkish Lira have caused housing sales in Turkey to drop 6 percent in the first quarter.

The fall in sales took a particular toll on purchasing with mortgage loans, which faced a 30 percent fall in the three-month period.

While the number of houses sold in the country declined 11 percent to 87,617 in March, the amount has become 257,853 during the January-March period, marking a 6 percent drop, according to the Turkish Statistical Institute (TÜİK) data announced yesterday.

Gloomy picture

The steepest decline, however, is seen in the transactions undertaken with mortgage loans as high interest rates put off citizens from borrowing.

Mortgage loan-funded purchases, which accounted for around one third of the overall sales in March, have plunged by around 41 percent in March and 30 percent in the first quarter.  

Ten-year house loan interest rates, which fell below 0.7 percent to historically low levels, are currently at around 1.1 to 1.4 percent in Turkey. Sector representatives see house market contracting by around 20 percent at the year-end due to the rise in interest rates, volatility in the current rate and high base effect. The sales saw a leap in 2013 thanks to record low borrowing costs and a house buying rush fueled by fear of announced tax hikes.