Analysis of Housing Finance Systems in Turkey

Abstract

Housing Finance system has provided funds to households and organizations for buying their homes and premises. There are different type of housing finance systems which are applied by different countries. Housing finance systems can be more efficient, if private sector and public sector work together and harmoniously.
 Housing Finance system has made considerable progress in Turkey in the last 20 years. Before housing finance system was developed in Turkey, people could have bought houses by combining their retirement allowances and savings. Another method for financing their house, people could have borrowed from relatives or close friends along with their own savings. The Mass Housing Law (Law No: 2985) entered into force in 1984.The main target of the law, to find a solution of the housing problem in Turkey. Law also determines the tasks of the Housing Development Administration (TOKİ).
 After 2000’s Turkish Banks began to extend long term housing loans, but there was not mortgage system. Due to inadequate saving and income levels, it was not easy to use banking finance system for the low and middle income groups. In 2007, new legal regulations come into force, which is called Mortgage Law, for improving legal framework for borrowers and lenders in the primary markets and also made regulations for integrating primary mortgage market to the capital markets. 
 In our paper, the finance methods and improvements in the housing finance in Turkey have been analyzed evaluating legal regulations and also the methods which is used by banks and other related institutions.