"What is different so far in this price run-up is that there has been only modest growth in the exposure of banks, compared to the spike in real estate transaction volumes. This suggests that the local banking system's contribution to financing real estate transactions is currently low," said
Despite the slow growth in real estate-related lending, the
In addition, the real estate sector constitutes one of the pillars of the economy of
The new caps on mortgage lending are likely to help prevent the worst excesses.
Despite the current slow loan growth to real estate sector,
"We foresee an acceleration of real estate lending as developers launch new projects, and more local and expatriate customers seek to enter the mortgage market. Tighter rules on new mortgage loans, capping loan-to-value (LTV) ratios, are likely to buffer banks. But if they aggressively expand their exposure to the real estate sector, risks will continue to build," said Engin.
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