Evaluation of financialization process in Turkey through mortgage loans: The case of Istanbul

Housing is an important phenomenon with social, economic and political effects. As housing historically dominates the construction sector, it is also a driving force for the field of finance because of the loans that financial institutions give to both the construction companies and the end users. This thesis discusses the housing phenomenon in the context of the impact of mortgage loans on financialization. The process of financialization of space is notably taking place in developed countries, but also in emerging countries too. Unlike developed countries, Turkey has adopted in the mortgage system in 2007, which can be regarded as quite a late date. The year 2007 also marks the beginning of the global financial crisis due to the mortgage. Turkey is one of the least affected countries by the global financial crisis due to being included late in the mortgage system, claiming high credit scoring points and high LTV ratio and having a structure that does not allow subprime lenders. However, the accumulated mortgage debt has been increasing at a significant rate since 2007. Even though Turkey is a late adopter, the current accumulated mortgage debt has reached 49.127,26 million dollars by 2018. It would not be wrong to say that mortgage debt amounts and securitizations in emerging countries are limited with respect to the developed countries. In this context, we must say that there is not yet a securitization system in force in Turkey. Nevertheless, the real estate certification system, which we can consider as an effort of liquidating the space, started in March 2017 as a pilot scheme. This study contributes the literature on the financialization of space in emerging countries by presenting to what extent the introduction of the mortgage system has affected the housing supply in Turkey and the dimentions of uneven geographical development has occured accordingly. A mixed analysis method was used in this study. The data were collected in three different stages feeding each other. In the first step, quantitative data were collected from institutions, one of which was the largest mortgage lender in the country; then through analysis of these data, in-depth interviews were conducted for collecting the qualitative data, and finally with the analysis of these two data sets, household surveys were conducted in the case of Istanbul. This thesis reveals the problem at the first stage and then describes the methodology applied. Later, a short discussion on the concept of financialization is presented by taking the mortgage system as a focus in the urban space. The literature review aims to provide an analytical basis for determining in what aspects the housing sector has influenced in the experience of financialization in Turkey. Examining the mortgage system cases in developed countries, it is aimed to provide a framework concerning the similarities and differences between the operating principles of this system in developed countries and in Turkey, which is just included the system in 2007. In the stage of field work, the experience of financialization is examined in the case of İstanbul, called the financial capital of Turkey. As a result, it has seen that mortgage loans, which marketed by the state, finance and real estate field representatives with the claim that they have increased accessibility to housing, lead to lack of alternative in the supply of national housing.