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Housing finance in Turkey : The Role of Housing Loans Extended by Commercial Banks

Aydın, Şadiye
With the 1980s, as a result of economic and financial deregulation policies, housing finance systems in most countries have had great transformations and have become market-oriented. Recently, in Turkey, a draft law was submitted to the parliament which can be regarded as an attempt to integrate housing finance to capital markets through the establishment of secondary market for housing loans extended by commercial banks. In this thesis, it is aimed to evaluate the role of housing loans extended by commercial banks on housing finance in Turkey, to assess the prospective legal regulation in terms of lenders and borrowers of housing loans and to discuss the anticipated impacts of this scheme to the commercial banks, the housing loans and borrowers within the context of global trends in housing finance. For these purposes, housing files extended by commercial banks have been examined and in-dept interviews have been conducted with interviewees from commercial banks, Capital Market Board and Housing Development Administration. As a result, it is found out that the role of housing loans extended by commercial banks is very limited in housing finance in Turkey and only high income groups can access these loans. Moreover, it is explicit that the housing finance scheme in the draft law is entirely market-oriented and targets the middle and upper income groups. On the other hand, such a policy orientation is quite problematic and paradoxical in that; the housing problem in Turkey is most dramatically felt by the lower middle and low income groups.