‘High mortgage rates preventing home ownership’

The cost of a mortgage due to high interest rates is too high for the average would-be homeowner and should be decreased to more reasonable levels, a leading real estate expert said on Tuesday.

“It is necessary to reduce interest rates on mortgages to 0.5 percent for those loans to be used by a larger community,” said Real Estate Investing Partners Association (GYODER) President Işık Gökkaya as he spoke at the opening ceremony of the real estate summit and fair İSTANBUL Restate. As part of his speech, he also suggested that the interest paid on mortgages should be deductible from income tax to make home ownership more affordable. “We need an increased state role in resolving this problem, which prevents low-income people from purchasing a home,” he said. Presently, most banks charge interest of between a 0.9 and 1.1 percent on mortgages with a 10 to 20-year repayment period. Those who want to buy a TL 100,000 house are, for example, required to pay more than TL 170,000 in payments higher than TL 1,400 monthly installments for a 10-year loan. On Tuesday, Gökkaya was also critical of the short period of the Value Added Tax (KDV) discount during the second half of 2009. The government reduced the KDV rate for the sale of homes over 150 square meters from 18 percent to 8 percent for three months to stimulate the real estate market during the global financial crisis. “Since this discount was only limited to relatively big homes, the real estate market was reinvigorated only for a short period. The government should enact a permanent KDV reduction that will cover the entire real estate market to ease residential purchases,” he said. Kaynak: 17 May 2011, Tuesday / TODAY’S ZAMAN, İSTANBUL