US and Turkey home loan rates at 20-year peak

US home loan interest rates topped 7 percent and hit a 21-year high after April 2022.

According to The New York Times (NYT) story, the average interest rate on a 30-year fixed-rate home loan, the most widely used home loan in the US, rose last week to 7.09 percent. hundred. This rate was 6.96 percent last week.

Home loan rates, which were in the 2.5-3.00 percent range in 2021, have risen over the past two years in parallel with rising inflation and US Federal Reserve interest rates. .(Fed).

The Fed also raised the policy rate to 5.50 percent last month, the highest in 21 years. Annual consumer inflation in the country was 3.2 percent in July. Core consumer inflation was calculated at 4.7 percent.

In the NYT news, it was noted that home buying is becoming increasingly difficult due to high prices, high interest rates and low supply, with home loan rates expected to remain at levels high in the short term.

Experts expect home loan rates to start to gradually decline from the end of the year.

In the United States, existing home sales were down about 19 percent annually in June. During this period, first-hand home sales increased by 24 percent.

Despite the low demand in the US, the high trajectory of housing prices continues with the effect of low supply.

The median home price in the US is $410,200, close to last year’s peak of $413,800.

Goldman Sachs, one of the main US banks, expects an increase of 1.8 percent in 2023 and 3.5 percent in 2024 in house prices in the country.

US home starts rose 3.9 percent on-month and 5.9 percent on-year to 1,452,000 in July, beating market expectations.

INTEREST RATES IN Türkiye AT THE MAXIMUM OF 20 YEARS

Interest rates on home loans in Turkey, averaging 36.45 percent, are at a 20-year high since September 2003.

In Turkey, a maximum of 10 years of home loans are given, but recently banks have almost completely turned off the tap on home loans.

Citizens who want to get a home loan, even at high interest, can find a loan for a very small part of the home price.

In fact, home sales in Turkey decreased by 22.1 percent in the January-June period compared to the same period of the previous year and amounted to 565,779.

HOUSING CRISIS

Turkey is facing a real estate crisis that has deepened in recent years, along with currency and inflation crises.

With housing turned into an investment tool for national and foreign capital, millions of citizens faced a housing crisis and landlords and tenants came into conflict.

While wealthy foreigners acquired citizenship by buying a home, Turkish citizens could not access housing.

The president of the Real Estate Law Association (GHD), lawyer Ali Güvenç Kiraz, announced that while the demands for rental eviction were 22 thousand in all of 2022, they reached 47 thousand in the first 6 months of this year.

In June 2023, the average rate of increase in house prices in Turkey was 95.9%. The cumulative rate of increase in house prices over the past three years has reached 560 percent.

According to CBRT figures, the average price of a 100 square meter house increased to TL 2,460,000 in Turkey and TL 3,722,000 in Istanbul.