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Friday, June 08 2007 @ 06:51 AM Central Daylight Time
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Turkish banks are in brisk competition to get as many customers as possible for their housing loans on the eve of the unveiling of Turkey’s long-awaited mortgage system.
Almost all banks are filling the airwaves with commercials, each with a claim that theirs has the most suitable loan conditions. They all have alluring names for their campaigns such as “the loan with unemployment insurance,” “low-cost mortgage” and “loan at your door,” but all these commercials have little to say about interest rates. Side costs, such as commission fees, interval payments and the cost of expertise are also being omitted or intentionally disguised.
Experts in the field are warning customers to calculate conditions very carefully and to consider more than just interest rates before deciding on what bank to take out a mortgage from. Customers should inquire about other costs that they may be asked to pay during the loan process.
Ersin Özince, top executive of leading private bank İş Bank, says there are other factors besides interest rates that determine the cost of a loan. “Consumers have to analyze in depth any cost items that banks apply to loans,” he underlines, adding that a person should find a reliable bank before he or she finds a suitable house to buy. He said İş Bank may consider increasing the variety of its products in accordance with the needs of its customers.
“We need neither to exaggerate in commercials, parade, nor to show housing loans as the number-one banking service,” Özince said.
President of the Consumers Union Bülent Deniz said the ability to pay is most important factor in deciding which bank to choose for home loans. “The important thing is not how much in loans the bank can provide for you, it is how much money you can pay per month,” he says, advising consumers to compare and contrast different banks’ loan details.
The banks’ advertising campaigns are different from last year’s since the commercials are focusing more on suitable conditions for providing home loans. Last year the focus was on lower interest rates. This year the monthly rates for housing loans have hovered above 1.5 percent, but banks are attempting to profit from the mortgage system’s positive image.
The mortgage system is riding on large expectations. The volume of home loans, which was around YTL 24 billion in March, is expected to quickly rise between YTL 50 and 60 billion. This ambitious forecast about the growth of the housing loan market is inflating banks’ appetites and the impetus behind the increasing competition.
BNP Paribas bought a majority stake in Turkey Economy Bank (TEB) a few years ago, expecting to earn much from Turkey’s dynamic and emerging financial markets. TEB Individual and Corporate Banking Vice General Manager Cemal Kişmir says the UCB, a subsidiary of BNP, will bring a number of attractive mortgage products once the system’s legal infrastructure is completely established.
Another bank vying to stand out with the mortgage system is Şekerbank, which has decreased its housing loan rates to 1.54 percent. Its campaign “The loan at your door” is promising its customers 48-month loans with a grace period for the first four months. Loan applications can be made by phone. Loans can also be issued by phone.
Finansbank is also trying to increase its share of the housing loan pie. It reduced interest rates to 1.49 percent and increased the maturity time to 360 months. The bank also accepts applications via mobile phone. Denizbank, purchased by banking giant Dexia which operates in 33 countries, is trying to launch some of Dexia’s 250 different mortgage services in Turkey this year. Denizbank General Manager Hakan Ateş said Turkey’s housing demand will reach 800,000 in 2015 and housing loan demand will also increase 15 or 20-fold in coming years. “The competition will be fiercer and we want to take our position in this race,” he said. |
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