Konut Kredisi Market in Turkey

After years of poor credit ratings, the Turkish financial markets erupted into cheers, when credit rating agency Standard & Poor upped the country’s credit local currency sovereign rating to BBB, i.e. to investment grade. Turkey’s financial history has gone through a roller coaster ride and has seen several ups and downs, with the most recent one in 2001. However thanks to a series of unconventional decisions including the passing of the Mortgage Law in 2007, the country has seen a tremendous spurt in growth. This law has been a great encouragement for several mortgage companies that have catered to a wide variety of clients. There are some companies that aim to provide affordable options to the poorest of the poor by providing konut kredisi at very low interest rates for up to 30 years. The country’s mortgage industry has been a flag bearer of sorts and has played a pivotal part in recuperating the country’s financial market. No wonder, investment in Turkish property by foreigners had increased by about 40% in 2010. Pricewaterhouse Cooper has even voted Istanbul as the most favored place for property investment in Europe for two times in a row. The new Mortgage Law passed in 2007, paved way for several konut kredisi products including those based on adjustable rate mortgages. Thus, the Consumer Price Index would decide the variable interest rate. Policies like these led to a surge in the mortgage loans. Thus banks began to play an active role in the country. By February 2011, konut kredisi reached to about 59.188 billion TL with public bank mortgage loans volumes at 17.409 billion TL, thus experiencing a growth rate of 46.04 %. Increasing job prospects have caused several people to migrate to cities and towns, thus provoking the need for urban housing facilities. If reports from the Global Property Guide are to be believed, Istanbul itself needs about 250,000 houses to accommodate the burgeoning crowd. Banks are trying their best to accommodate to this population, albeit under the strict guard of the government that is trying hard to curb inflation. But it’s not only the housing industry that is experiencing exponential growth. The economic prosperity has boosted growth in all sectors, including tourism. An independent report that states that the number of tourists visiting the country in the first half of this year, increased by about 12% in the first six months. Thus there’s been an increase in the demand for hotels and other accommodations to cater to the growing population.