Housing loan rates have skyrocketed: One house for the citizen, two houses for the bank
Steadily rising home prices and rising home loan interest rates have caused an increase in the monthly payment required by those who want to own a home with loans.
According to Central Bank data, at the beginning of last year, average house prices in Istanbul were TL 1.6 million, while the monthly payment required for home loans ranged from TL 21 to 31,000.
In the same period this year, while the average price of residences exceeded 2.8 million TL; The monthly payment amount of home loans starts from 28 thousand TL and goes up to 63 thousand TL.
If the house to buy is not zero, it is not possible to obtain a loan from public banks; With the interest rates on home loans applied by private banks, the citizen who buys almost a house for himself has to pay interest as much as the money for two houses.
Here’s the impossibility of owning a house with a loan after the level of house prices and interest rates on loans…
Source: Sozcu.com.tr
THE ‘AVERAGE’ PRICES OF HOUSING EXCEEDED 2.8 MILLION TL
According to the latest data from the Central Bank (CBRT), the average price of a 100-square-meter house across the country increased to 1,868,200 TL as of January 2023.
In the same period, prices per square meter in Istanbul increased to TL 28,910. That is, the average price of a 100-square-meter house in Istanbul has exceeded 2.8 million as of January.
However, those who think ‘I wonder if I can have a house instead of paying rent’ are experiencing the first hurdle with the credit crunch imposed by banks.
According to the latest applications, 90 percent of houses with an appraisal value less than TL 1 million receive loans; 60-70 percent of the houses with an appraisal value between 1 and 2 million TL and 50-60 percent of the houses between 2 and 5 million TL are handed over.
However, while this is valid in writing, it has no equivalent in practice; banks usually grant a maximum of TL 250,000 in loans.
However, let’s say the loan needed to buy a house in Istanbul at an average price (2.8 million TL) was given:
1.1 MILLION TL OF SAVINGS NEEDED EVEN IF THE BANK PROVIDES A LOAN
Even if banks give 60 percent of the loans to those who want to buy a 2.8 million TL flat without going through credit restrictions, they give a maximum of TL 1.7 million.
This means that the citizen has 1.1 million TL in savings even to be able to buy a medium-priced apartment.
This amount was 332,000 TL for a mid-priced flat in Istanbul this period last year.
The required monthly payment for the remaining TL 1.7 million home loan starts at at least TL 28,000 and exceeds TL 63,000.
While the interest rates for housing loans from public banks are 1.29, this rate can start at 1.99% and go up to 3.60 in private banks.
This means that if a loan from a public bank is used, a total of 3.4 million lira will be paid back to the bank in 10 years.
Even if the loan was used from a private bank, the total amount of the payment exceeds 7.6 million TL in 10 years. This means that the citizen who buys a house pays almost as much interest as two houses.
INTEREST IN PRIVATE BANKS UP TO 2 HOUSEHOLD MONEY
On the other hand, last year, banks generally paid up to 90 percent of the value of houses with an appraised value of 500,000 lira or less; For houses with an appraised value of more than 500,000 lira, it provided loans up to 80 percent of the value.
While interest rates on housing loans from public banks fluctuated between 1.29 and 1.34 percent last year, they started at 1.95 and rose to 2.40 in private ones.
In other words, only those with savings of at least 332,000 lira were able to buy a mid-priced apartment in Istanbul last year.
This means that if a loan from a public bank is used, a total of 2.7 million lire will be paid to the bank in 10 years, that is, interest will be paid as much as a house fee: if the loan from a private bank, the total amount of the payment will reach 3.7 million lira in 10 years; In other words, it meant paying more interest than the amount of the house purchased.
House prices, which have not been able to stop in the past year, and rising interest rates have made it impossible for citizens to buy a house with a loan. For an average flat of 2.8 million TL in Istanbul, 5.8 million TL of interest must be paid to the banks, that is, two houses.