Reduction of Interest Rates in Turkey: Increase in Mortgage Sales and Revival Expected in the Real Estate Market

With the decline in interest rates, Turkey's real estate market is preparing for a new wave of activity.
According to the Housing Sector Expectation Survey for the second quarter of 2025, conducted in cooperation between KONUTDER (Association of Housing Producers and Investors) and NielsenIQ Turkey, most respondents expect an increase in mortgage sales and a rise in demand for new constructions.

Ziya Yılmaz, President of KONUTDER, said:

"The fall in interest rates shows that the long-standing high levels are beginning to come down — this is an important step to restore confidence in the real estate market."

Why Mortgage Sales Fell and What Will Change Now

Over the past five years, the share of mortgage transactions in the market has fallen significantly.
During the 2016–2020 period, sales made using loans were about 31%, while by 2025 this rate dropped to 17%.
At the same time, the share of primary residences fell from 45% to 30%, indicating a decline in demand for new constructions.

However, according to Yılmaz, the situation is close to reversing:

"The decline in interest rates and the removal of credit restrictions by the BRSA (Banking Regulation and Supervision Agency) will lead to an increase in mortgage transactions and higher sales of new constructions."

KONUTDER Survey Results - 2025

According to the survey conducted among 25 executives from Turkey's largest construction companies:

• The Central Bank of the Republic of Turkey began a monetary easing period and reduced the interest rate by 250 basis points.

• 100% of participants are confident that rates will continue to fall.

• 76% expect an increase in mortgage sales (previous survey - 47.6%).

• 68% predict an increase in sales of new constructions within the next 6 months.

• 80% of participants expect rent levels to rise, and 72% expect further increases in property prices.

Forecast for the Coming Months

According to Yılmaz, further declines in inflation and meeting the targets set out in the Turkey Medium-Term Economic Program (MTP) will lay the groundwork for the revival of the mortgage market.

"Lowering interest rates will make housing more accessible and give momentum to loan-financed sales.
It is important that this process is sustainable and that borrowing costs are reduced to a reasonable level," he said.

The KONUTDER president also emphasized the need to reduce land costs so that developers can implement affordable projects.

Rising Costs Persist

Despite positive expectations, cost pressures remain high.
According to KONUTDER data:

• 88% of builders expect an increase in labor costs;

• 76% expect construction material price increases;

• 80% believe overall expenses will continue to rise;

• 68% of companies plan to start new projects within 6 months;

• 64% foresee an increase in urban transformation programs (urban renewal).

Views of Reptur Experts

Reptur experts believe the downward trend in interest rates will create new opportunities for investors and homebuyers in Turkey.

"If inflation dynamics continue, mortgages will become an important tool to buy property again.
This applies especially to Istanbul, Bodrum, Ankara, and Izmir, where demand for primary residences is already starting to recover.
We expect the number of loan-financed transactions to increase by double digits from the end of 2025."

Reptur Projection: Revival in the Primary Market

According to the Reptur analytics department's forecasts,

• a 1 percentage point fall in interest rates could increase mortgage sales volume by 8–10%;

• by the end of 2026, the share of mortgage transactions could recover to 25–27% of total sales;

• this will primarily affect new constructions in central districts of Istanbul.

Would You Like to Calculate Profitability or Learn How Changes in Interest Rates Will Affect Your Property?

Reptur experts will assist you with:
— calculating the cost of purchasing with a mortgage,
— evaluating rental expectations,
— choosing the most suitable project with installments or credit.

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