Banks

No relief in interest rates any time soon, says banking boss

By Fitz ⋅ July 17, 2008 ⋅ Email this post ⋅  Print this post ⋅ Post a comment

The head of the Turkish Bankers’ Association (TBB) sounded a note of caution when he told Today’s Zaman that he didn’t see any sign of a fall in interest rates in the short-term.  Blaming the current tight global credit conditions, he explained that cheaper housing finance was dependent on Turkish banks being able to borrow cheaply on the international markets but that securitised lending was increasingly difficult to obtain.  Turkish interest rates are 1.6% per month, up from 1% a year ago.

But it’s not just the financing costs which are deal breakers.  Disagreements between banks and borrowers over the value of assets used to back the loan often become intractable.  This doesn’t surprise me.  Valuation in Turkey is an inexact science at best and I sympathise with the banks given landowners are usually wildly optimistic regarding the value of their property.  Perhaps a sanity check isn’t a bad thing after all.