Mortgages in Turkey 2007 (Market Guide)

Turkey experienced strong growth in mortgage gross advances over the last few years. What are the current issues facing this market? How are housing policies affecting its performance? Who are the biggest lenders? What will be the size of the sector in the next five years? This report provides the answers.



Report Highlights
The Central Bank of Turkey has continuously increased its policy rate during June 2006 to July 2006 from 13.25% to 17.50% in order to rein in inflation. Although typical mortgage rates have increased this year, they are expected to fall gradually in the longer term. From 2002 to 2006, there has been continuous growth in the level of balances outstanding of mortgage loans at a compounded average growth rate of 191.5%, thus further reflecting strong growth in mortgage lending. The secondary legislation will allow lenders to get access to more efficient funding methods. Indeed, lenders currently use short-term deposits (average maturity of three months) to fund long-term borrowing (mortgages).


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Overview 1
Catalyst 1
Summary 1
Executive Summary 2
Market size 2
Market forecasts 3
Key issues 3
Key market players 4
Contents 5
Figures 6
Tables 7
Market Context 8
Country overview 8
Demographics data on a selection of major western European countries 10
Population 10
Economy 11
Housing market 16
Housing stock 16
House prices 17
Government housing intervention 18
General housing policy 18
TOKI and SPO 18
Market data 19
Mortgage interest rates 19
Market size 19
Balances outstanding 19
Gross advances 22
Product lines 23
Market structure 24
Categories of financial institutions 24
Commercial banks 24
Islamic Finance Houses 25
Mortgage market structure 25
Market structure overview 25
Funding 25
Distribution 26
Regulatory environment 26
Industry regulators 26
Türkiye Cumhuriyet Merkez Bankas? 26
Bankacilik Düzenleme ve Denetleme Kurumu (BDDK) 27
Industry associations 27
Türkiye Bankalar Birli?i (TBB) 27
Other noteworthy organizations 27
Tukder 27
Credit bureaus 28
Kredi Kayit Bürosu (KKB) 28
Repossessions and rules of law 28
Regulatory issues and developments in the banking sector 28
New laws have been introduced affecting the legal framework and supervision of the banking system 28
The Banking Sector Restructuring Program 29
Turkish politicians have welcomed the benefits of Basel II 31
Regulatory issues and developments in the mortgage market 32
The Mortgage Law was approved by the Turkish parliament in February 2007 32
The Mortgage Law is expected to bring a number of effects 33
Key issues 34
Competitor and Product Overview 35
Top five mortgage lenders 35
Market share by balances outstanding 35
Product analysis 37
Typical product characteristics 37
Market Forecasts 38
Forecasting gross advances 38
Datamonitor predicts that mortgage gross lending in Turkey will fall in 2007 before picking up in 2008 38
Future prospects 40
Market attractiveness 40
Market inhibitors 40
APPENDIX 41
Supplementary data 41
Tables relating to Chapter 2: Market context 41
Definitions 41
Balances outstanding 41
CAGR 41
Fixed rate mortgage 42
Gross advances 42
Loan-to-value (LTV) 42
Mortgage intermediary 42
Remortgaging/refinancing 42
Variable mortgage 42
Forecasting methodology 42
Research methodology 42
Further reading 43
European mortgages 43
Ask the analyst 44
Datamonitor consulting 44
Disclaimer 44

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Table 1: Forecast of mortgage gross advances in Turkey, 2005-11f, (TRY million) 3
Table 2: Total population across major western European countries, 2002-06 10
Table 3: GDP at current rates across major western European countries, 2002-06, (€ billion) 11
Table 4: GDP per capita at current rates across major western European countries, 2002-06, (€) 12
Table 5: GDP growth rates across major western European countries, 2002-06, (%) 13
Table 6: GDP composition by sector across major western European countries, 2006, (%) 14
Table 7: Inflation across major European countries, 2002-06, (%) 15
Table 8: Unemployment rates across major western European countries, 2002-06, (%) 16
Table 9: Residential mortgage balances outstanding compared to GDP of selected European countries, 2006 21
Table 10: Market share of top five competitors in the Turkish residential mortgage market in terms of balances outstanding, 2005-06, (€m) 36
Table 11: Forecast of mortgage gross advances in Turkey, 2005-11f, (TRY million) 39
Table 12: Residential mortgage gross advances and balances outstanding in Turkey, 2002-06 41
Table 13: Net residential mortgage lending in Turkey, 2003-06, (TRY million) 41


Figure 1: Mortgage gross advances have been growing rapidly in Turkey, 2002-06 2
Figure 2: Akbank remains the largest provider of residential mortgage loans in Turkey in terms of balances outstanding, 2005-06 4
Figure 3: A snapshot of Turkey's key statistics, 2006 9
Figure 4: 68.3% of Turkish households were owner-occupied in 2000 17
Figure 5: Mortgage balances outstanding reached TRY22.1 billion in 2006 20
Figure 6: Net lending in Turkey fell by 2% in 2006 22
Figure 7: Mortgage gross advances have been growing rapidly in Turkey, 2002-06 23
Figure 8: The three pillars of Turkish commercial banking, 2007 24
Figure 9: Regulatory overview of Turkey, 2007 26
Figure 10: Akbank remains the largest provider of residential mortgage loans in Turkey in terms of balances outstanding, 2005-06 35
Figure 11: After falling in 2007, mortgage gross lending will pick up in 2008 to reach TRY33.2 billion in 2011 in Turkey 39

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