The FINANCIAL — Despite house sales plunging by 25.2 percent as of the end of the third quarter over the same period a year ago, the amount of mortgage loans has seen a jump of more than 26 percent by the end of October since the beginning of the year, reaching TL 53.6 billion, underlining the increasing tendency to refinance.
According to Today's Zaman, the general manager of DD Mortgage, Murat Aysan, even believes that the amount of mortgage loans will continue climbing for the rest of the year, to reach TL 57 billion. For him, although mortgage loans rising concurrently with a drop in house sales seems to be paradoxical, this is a natural consequence of the Turkish economy's growth pattern.
“The first reason behind this increase is the augmenting share of the financial sector in financing the houses with mortgage loans and the most significant factor leading to this situation is the relative increase in the amounts of loans extended through mortgages in line with the falling interest rates, along with the entrance of masses of people, who had been opting out getting loans as alternative means of financing while purchasing houses, to the finance sector as customers,” he opined.
Another factor behind rise in mortgage loans, Aysan noted, is the increase in the loans dubbed “Individual Mortgage Financing,” which are based on the collateralization of the existing houses.
Aysan argued that the refinancing is the other important reason for the increase of mortgage loans. Parallel to the rapid decline in interest rates for lira-based loans recently, in particular due to positive developments in the Turkish economy, the demand for refinancing is also on the rise, he said.
In this context, people have several choices when restructuring their loans through refinancing, such as lowering monthly payments for the same term, or decreasing the term of their loans without changing the monthly payments or having a combination of multiple choices at once.
He said DD Mortgage has several options for its customers, the most lucrative of which is the one that envisages lowering the term and installments of the existing loans, which is the preferred option of nearly 35 percent of applicants. Another portion of the company's customers want to reduce their payments through the lengthening of the terms, as this option doesn't require the payment of the banking and insurance transaction tax (BSMV) again and it is not subject to the Resource Usage Support Fund (KKDF) deduction, Aysan noted, underlining that such advantages render this type of refinancing option the cheapest type of financing.
Highlighting that the amount of the refinancing has been beyond their expectations, he asserted that many banks are launching loan transfer campaigns, which means offering loans to mortgage customers of other banks under better interest rate conditions to attract them as customers, and said the amount of the refinancing is likely to exceed TL 10 billion by the end of this year.
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