Interest rate cuts in the second half of 2019 in Turkey

Interest rate cuts in the second half of 2019 in Turkey
26 December 2019

Since the second half of 2019, there has been a 1200 basis point interest rate cut by the Central Bank. According to the data of, there was a 32 percent increase in consumer loan applications, 6 percent in housing loan applications and 11 percent in vehicle loan applications in 2019 due to the impact of the interest rate cuts.

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ISTANBUL (TR) - In the second half of 2019, with the interest rate cuts taken by the Central Bank, the financial sector was moving. On July 25, at the first Monetary Policy Committee (PPK) meeting headed by Murat Uysal, interest rates were reduced from 24 percent to 19.75 percent with a 425 basis points reduction. Immediately after the decision of the biggest interest rate cut in recent years, on 12 September, the policy rate was reduced by 325 basis points to 16.50 percent and on 24 October by 250 basis points to 14 percent. Finally, with the decision of the Central Bank announced on December 12th, the policy rate was lowered by 200 basis points to 12 percent. Thus, with the decisions taken in the second half of 2019, the Central Bank cut interest rates by 1200 basis points in 6 months. Consumer interest in housing and vehicle loans with interest rate cuts affected markets positively.

Online consumer loan applications increased by 32 percent.

According to the data of the online comparison platform, consumer loan applications increased by 32 percent in 2019 compared to the previous year. Consumer loans applied to the repayment term of consumer loans increased by 25 percent. While the most applied loan amount was 20 thousand TL, the most preferred maturity was 60 months.

In 2019, housing and vehicle loan applications increased compared to 2018. Mortgage applications increased by 6 percent while the term extended by 3 percent. The most demanded amount in housing loans was 150 thousand TL. Vehicle loan applications increased by 11 percent. The maturity period increased by 17 percent, while the most preferred loan amount was 40 thousand TL.

“Interest rate cuts made the automotive and construction sector smile

Stating that the markets were moving with the interest rate cut decisions taken by the Central Bank in the second half of 2019, Ersin Yaşar said, “After the interest rate cut in July, consumers turned to house loans and August 2018 Mortgage applications, which have been low since 2014, increased by 300 percent in the last months of 2019. With this increase, we have seen the concrete impact of the Central Bank's interest rate cuts on the consumer. With the effect of other interest rate cuts and the discount mobilization initiated by state-owned banks, monthly interest rates on housing loans decreased from 3 percent to less than 1 percent, while interest rates on vehicle loans decreased to 0.49 percent.”

Istanbul is at the top of the loan applications

When the distribution of needs, vehicle and housing loan applications by cities is examined, it is seen that İstanbul is the first with 21.6 percent among the total applications. Istanbul was followed by Ankara with 7.6 percent, İzmir with 6.1 percent, Bursa with 4 percent and Antalya with 3.5 percent.