Housing Loans of Participation Banks and Their Roles in Housing Finance

Abstract

Real estate covers a wide variety of asset classes. Among these asset classes, residential ones are the most popular and the required financing for producing, developing and acquiring differs accordingly. Mainly, housing finance systems can be divided into housing finance for project developers and housing finance methods for end users. Housing finance for project developers can be mentioned as Financing of Real Estate Investment Trusts and Loans for Builders. When it comes to housing financing methods for end users, Direct Financing Method, Contract Method, Deposit Financing Method and Mortgage Bank Method are the underlined ones. Moreover, Financing sector can also be divided into two main groups as the Non-Institutional Sector and the Institutional Sector. The effective housing finance system must have the function of collecting the necessary funds from the economic units with surplus funds and transferring them to the individuals and institutions that are in need of borrowing to buy a house. In this study, housing financing methods are examined. Furthermore, the role of participation banks in real estate financing and housing financing in Turkey is determined. Finally, the evaluation of the research was made and suggestions were presented.