Guarding against Lira appreciation the Turkish central bank chopped a further 50 basis points off its benchmark interest rate today and also cut overnight borrowing and lending rates.
The bank cut the one-week repo policy rate from 5.5%to 5%, the borrowing rate to from 4.5% to 4% and the lending rate from 7.5% to 7%.
Rate cut expectations had grew after Central Bank Governor Erdem Başçı said the bank may consider cutting its one-week repo policy rate if the lira climbs too fast, which could widen Turkey’s already large current account deficit.
The bank last cut its main policy rate in December, when it trimmed it by 25 basis points. Turkey is not one of the easiest countries for foreigners to get a mortgage in, but it is arguably one of the fairest (in terms of treating foreigners the same as Turks) and also importantly it is no worse now than it was during the boom — unlike most countries now suffering a mortgage void.
The economy is growing and stable and the mortgage market growing rapidly, as foreigners become more keen to invest in Turkish property, mortgages will become more of an issue, and reducing interest rates can only be a plus for buyers, wherever they are from.
For anyone considering trying for a Turkish mortgage to make an investment, a couple of things are important to remember:
You will need around a 20% deposit, and the bank will carry out its own valuation and risk assessment before lending, so if you can get a 75% ltv mortgage, it will be 75% of the bank’s valuation not the seller’s so get the bank’s valuation before making any commitments.