The cost of the project to make middle-income people homeowners at a 0.69 percent monthly interest, which plays a key role in the government’s pork barreling assault, has emerged. According to the bill submitted to the Parliament by AKP deputies, credit support of up to 221 billion 167 million liras will be covered from this year’s budget to meet some of the interest burden of those who will take out mortgage loans from commercial banks. However, since such an expenditure has not been appropriated in the recently-passed 2023 budget, the Treasury will borrow from the market for all the subsidy needed.
If the demand for the home loan program is higher than expected, the amount of debt that the Treasury will raise from the market will increase to 442 billion liras. The Debt Ceiling Law, which limits borrowing annual borrowing, is also being amended so that the Treasury can undertake the additional borrowing. The Treasury will borrow up to 5 percent of the 4 trillion 423 billion lira budget revenues approved for 2022, that is, 221 billion liras. If the President uses his authority to increase this rate to 10 percent, the debt to be added to the public debt stock will exceed 442 billion liras. This borrowing for housing will not appear in the government’s net debt stock data.
According to the home loan program, a portion of the interest burden on the mortgages, and a portion of the installments to be paid in the first 3 years will be covered by the Treasury, which is why experts consider this a huge pork barrel.
According to the proposal, the total income of the household will be taken into account when calculating the amount of support to be provided for the installment payments of the house to be purchased in the first 3 years. The portion of the installment to be paid in the first 3 years exceeding 30 percent of the total income of the household will be covered by the Treasury.
According to the 30 percent rule, if the monthly installment of the housing loan is, for example, 25 thousand liras and the total income of the household (the monthly income of all family members including the spouse and children) is 30 thousand liras, the monthly installment to be paid by the citizen who buys the house will not exceed 10 thousand liras. While the citizen pays 10 thousand lira of the 25 thousand lira loan, the remaining 15 thousand lira will be covered by the Treasury. The President will be authorized to increase the 30 percent rate to 50 percent and to reduce the 3-year period to 1 year. At the end of 3 years, the Treasury support will end, and the borrower will have to pay the entire loan. After a certain year, the borrower will also start to pay back the subsidy provided by the Treasury.
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