Turkey eases mortgage terms to support first-time buyers

• Regulators equalised LTV ratios
• 90% for pre-owned and new homes
• Expert says impact will be ‘limited’

Turkey’s financial regulator has eased borrowing conditions for buyers looking to enter the housing market for the first time, but there is debate as to whether the measure will have a major impact.

First-time buyers can now take out mortgages on pre-owned homes on the same terms as newly built properties, after regulators equalised loan-to-value (LTV) ratios under new rules this month.

Previously, buyers of second-hand units could only borrow up to 60 percent of the property’s value, compared to the 90 percent LTV available to those raising a mortgage to buy a newly constructed home.

The Banking Regulation and Supervision Agency also announced that the higher LTV ratio would apply to buying housing units that were built after 2010, have an energy efficiency rating of at least C (the middle of the Turkish rating system), and are graded as earthquake resistant.

One catch, however, for first-time buyers entering the second-hand market is that the 90 percent LTV ratio will only apply to housing units valued below TL7.0 million ($160,000). 

There has been a strong increase in bank mortgages as a vehicle for house purchases in recent years, though much of this has been concentrated among new-build and off-plan homes. 

The number of mortgages rose by 49 percent in 2025, according to data from state statistics agency Turkstat, accounting for 236,000 of the 1.7 million residential units sold last year. 

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Although they have risen sharply, mortgage sales accounted for just under 15 percent of all residential unit purchases in 2025, with the majority of buyers using shorter-term bank loans, self-funding or other sources to pay for their home. 

While welcoming the easing of borrowing restrictions, real estate economist Dr Ahmet Büyükduman said the new LTV ratios for older units would not have a major impact on the housing market. 

Though mortgage sales account for 15 percent of the market, only five percent of financing for housing purchases go towards this segment, as most mortgages are for units in the lower end of the price spectrum, he said. 

“In my opinion the impact would be limited,” Büyükduman said. 

“I do not believe the market will care much since it is only five percent overall finance for housing purchases, this may go up two or three percent, most likely to around seven percent of the total.”

Added to this, continued high interest rates will be a barrier to home buyers, especially those entering the market for the first time, he said. 

At present, the central bank’s key policy rate is 37 percent, with commercial banks’ lending rates well above this.