Growth over the past two months

The real-estate industry in Turkey has displayed significant growth over the past two months, benefiting from the banks’ decision to lower mortgage rates to below 1 percent.

The growth in the industry added up to nearly 5 percent by the end of October, due to high demand and low mortgage rates. Until September, growth in the industry since the beginning of the year was only 3 percent.

By the end of the year, the total mortgage portfolio is expected to be anywhere between 41 billion and 42 billion Turkish Liras.

Banks first began to reduce mortgage rates in the second half of August; by September, many were offering mortgages with 1 percent interest rates and a pay-back period of 60 months, soon extended to 10 years. These moves began to draw customers and create more activity in the market. It was the first time such a lengthy pay-back period had been provided with an option of a 1 percent interest rate.

In September, banks restructured a record number of mortgages. Due to the increasing activity in the market, the industry attained growth of 2.24 percent that month, which persisted over the next month as market demand continued to grow.

In October, the industry growth rate was 2.5 percent and the total size of the portfolio reached 40.47 billion liras.

Banks are aiming for 20 percent growth in the mortgage market in 2010, which they believe will be the “year of normalization.” The real-estate industry saw its biggest activity in 2007, when it grew 37 percent, a figure the banks hope to achieve again.