TOKIBANK : A Suggestion for Structural Problems of Turkish Mortgage Markets and Housing Development Agency (TOKI)

Developments in primary mortgage markets, housing finance system and the activities of Housing Development Agency (HDA/TOKI) have been the major trends in Turkish housing markets in last decade. Based on the current policies, HDA seems the central institution to solve housing problems of the lower income households. However, it is arguable that HDA system may not be sustainable in the long term due to several structural problems involving lack of financial transparency and inefficient third party/government audit scheme. This paper explores critical issues in housing market/policies and limitations/problems of HDA with the aim of enhancing current framework of HDA and Turkish mortgage markets. As the solution for the inefficiencies, we discuss costs/benefits of transforming HDA to a full service financial firm having authorities on primary/secondary mortgage markets and also social housing policies. It is believed that this transformation may be useful to improve benefits of the social housing policies, to make accountable of the market-based activities and rent creation/distribution scheme of HDA and to develop Turkish mortgage/banking system