Turkish mortgage market: an assessment of its potential and riskiness

Kutlukaya, Mahmut
This thesis is the first attempt to provide a comprehensive evaluation of the Turkish mortgage market in terms its potential within the European region, the main risks of mortgage termination through default and prepayment decisions of the borrowers, and finally the current mortgage market policies applied by the national policy makers. The present research, firstly, uses a macroeconomic perspective and investigates the development potential or the depth of the Turkish market in comparison with 31 European countries by using a rich panel-data set. Secondly, it follows a microeconomic approach and uses the reduced-form models, which use loan-level data, evaluates the default and prepayment risks simultaneously and assesses the effectiveness of various policy choices that affect Turkish mortgage market. In addition, loan-level data also enables assessing the product and borrower level changes in the market in recent years. Main conclusions of this thesis are; Turkish mortgage market has a significant growth potential which is fueled by the factors such as growing economy, increasing population and urbanization trend, default risk is low in the Turkish mortgage market and default risk related policy choices are excessively tight and the level of prepayment risk is very high. The results of this thesis is expected to contribute both to the literature on mortgage markets and to the decision making processes of the national policymakers.


REITS in Turkey: the impact of the deviations from the global systems
Yönder, Erkan; Erdil, Erkan; Department of Economics (2015)
This dissertation aims to evaluate the impacts of divergence of Turkish Real Estate Investment Trust (REIT) sector/industry from the global REIT markets. Turkish REITs do not have to pay out any certain level of income to shareholders and have a sponsored ownership structure, governed by regulations different from the global REITs, while they are still tax-exempted. The dissertation investigates the tax arbitrage, impacts of corporate governance issues such as board composition and sponsor ownership on the ...
Real estate appraisal methods and their application in Ankara
Bulut, Zeynep; Türel, Ali; Department of City and Regional Planning (2011)
Real estate is one of the reliable and important investment types for individuals and institutions. Interest in the price appraisal of real estate has increased with rapid development of real estate sector and its legal infrastructure in recent years. Conducting planned urbanization, choosing settlement areas and estimating their inner or outer transport costs, improving capital markets transparency, and reliability require a reliable price valuation of real estate assets. Appraisal in real estate is also i...
Default risk of wage-indexed payment mortgage in Turkey
Erol, Işıl; Patel, K (2005-09-01)
This paper analyses default risk of wage-indexed payment mortgage (WIPM) in Turkey in comparison with other standard mortgage contracts originated in high inflationary economies. Emlak Bank launched WIPM linked to Civil Service employees' wage (CSW) index during high inflationary period of late 1990s. Concurrently, the government introduced a policy linking CSW index to semi-annual expected rate of inflation in an attempt to facilitate housing finance for the fastest growing sector of the population. We fin...
Computation of Hedging Coefficients for Mortgage Default and Prepayment Options: Malliavin Calculus Approach
YILMAZ, BİLGİ; Kestel, Sevtap Ayşe (2019-11-01)
This study explores the hedging coefficients of the financial options to default and to prepay embedded into mortgage contracts based on the change in spot rate, underlying house price and its volatility. In the computations, the finite-dimensional Malliavin calculus is applied since the distribution of both options is unknown and their payoffs are non-differentiable. Naturally, the hedging coefficients are obtained as a product of option's payoff and an independent weight, which permits the user to derive ...
Originating long-term fixed-rate Mortgages in developing economies: New evidence from Turkey
Erol, Işıl; Çetinkaya, Özgenay (Orta Doğu Teknik Üniversitesi (Ankara, Turkey), 2009-12-1)
This paper intends to analyze the recent developments to introduce and integrate mortgage markets into capital markets of Turkey. The Capital Market Board has recently prepared a legal framework not only for a proper mortgage system, but also for the eventual securitization of these mortgages. Turkish banks started to contract, for the first time ever, long-term fixed rate mortgages. The paper uses traditional option-pricing model to evaluate the current 10-year fixed rate mortgage (FRM) contracts with embe...
Citation Formats
M. Kutlukaya, “Turkish mortgage market: an assessment of its potential and riskiness,” Ph.D. - Doctoral Program, Middle East Technical University, 2015.