Mortgage Rule Overhaul Reshapes Türkiye’s Housing Market

Regulator eases lending to support mid-market demand

Türkiye’s housing market is entering a new phase following changes to mortgage lending rules introduced by the banking regulator. The Banking Regulation and Supervision Agency has revised loan-to-value ratios, removing the distinction between new and second-hand homes and increasing borrowing limits, particularly for lower- and mid-priced properties. The move is widely seen as an attempt to improve housing affordability for middle-income households amid elevated prices and borrowing costs.

Level playing field for second-hand homes

A major aspect of the reform is the elimination of long-standing disadvantages for buyers of second-hand properties. Previously subject to tighter mortgage caps, this segment can now access significantly higher loan ratios. For homes priced between 2 million and 5 million Turkish lira, borrowers are now allowed to finance up to 90 percent of the purchase price, boosting liquidity and expanding effective demand.

Focus on affordability in the mass market

The revised framework prioritises homes priced below 7 million lira, which make up the core of housing demand in metropolitan areas. Market participants argue that this segment is the most sensitive to credit conditions. With house price growth currently lagging inflation and rents remaining high, improved mortgage access could encourage renters to shift toward homeownership.

Tighter credit for luxury properties

While conditions have eased at the lower end, lending limits have been tightened for high-value properties. For newly built homes priced at 20 million lira or above, the maximum loan ratio has been cut to 40 percent. Regulators say the aim is to ensure more efficient allocation of financial resources toward lower-income groups rather than luxury demand.

Mortgage sales remain subdued

Despite the regulatory adjustment, mortgage-backed transactions continue to account for a relatively small share of overall home sales. According to official data, mortgaged purchases represented just 14 percent of total housing transactions by the end of 2025, down from 19 percent in 2022. Historically, the share was far higher during periods of lower interest rates.

Interest rates as the decisive factor

Analysts stress that the effectiveness of the new rules will largely depend on borrowing costs. Although the Central Bank of the Republic of Türkiye has begun cutting its policy rate, mortgage rates remain elevated. As a result, the reform may lift demand modestly but is unlikely to restore mortgage activity to levels seen during earlier low-rate cycles.

Savings may flow back into property

With housing prices rising more slowly than inflation and returns on deposits and gold improving household balance sheets, real estate may regain appeal as a store of value. In major cities, high rental costs continue to push households toward ownership, reinforcing the potential impact of easier mortgage terms.

Conclusion

As experts at International Investment report, Türkiye’s mortgage limit overhaul represents a calibrated effort to revive housing demand without fuelling another price surge. The long-term success of the policy, however, will depend on sustained declines in interest rates and broader confidence in the country’s economic outlook.