CUSTOMER PREFERENCES ON MORTGAGE FINANCE IN A STUDY WITH CONJOINT ANALYSIS.

Customer Preferences on Mortgage Finance in Turkey,This article consists of 48 pages and 11480 words. In order to have full access to this article, email us at thedocumentco@hotmail.co.uk

Ref No: 2785

TÜRKİYE’DE İPTF FİNANSMANINDA MÜŞTERİ HAZIRLIKLARI,

KONJİNAT ANALİZİ İLE BİR ÇALIŞMA.

Customer Preferences on Mortgage Finance in Turkey: Her ülkeye etkin bir konut finansmanı sisteminin önemi, bireylerin hem konut ihtiyaçları hem de finans, inşaat ve bu pazarlarla ilgili sektörlerin geliştirilmesindeki güçlenmenin sağlanması açısından önemli olduğu için ihmal edilemez. Dünyadaki gelişmiş ülkeler, ülkede ikamet eden alıcılara tadilattan sürekli bir para akışı geldiğinde uygun bir hortum finans sistemi ve mortga sistemi geliştiremedi. Böyle bir önemi taşıyan hâlâ ev finansmanı sektörü, dünyanın gelişmiş ve gelişmekte olan ülkelerinde çok fazla gelişmiş değildir.

Başlıca nedenler, bu ülkelerdeki makroeknomik istikrarı elverişsiz kılmaktır. Türkiye’de hosuing finans sektöründe önemli bir gelişme olmuştur. En önemli gelişmelerden biri de Meclis tarafından onaylanan yeni İpotek Yasası ile ipotek sisteminin geliştirilmesidir. Bu tezin amacı Türkiye’de konut ipoteği sistemini incelemek ve konut ipotek almaya karar verirken konçertelerin tercih ve tercihlerini etkileyen faktörleri vurgulamaktır.

Konjonktür analizi, Türk konut piyasasında sahip oldukları ipotek seçeneklerine ilişkin tüketici yanıtına dayalı olarak analiz ve tahrik amaçları için araştırmada kullanılmıştır.

Table of Contents

FOREWORD.. …iv

ÖZET…………………………………………………………………………………….v

TABLE OF CONTENTS. vi

LIST OF TABLES. viii

LIST OF FIGURES. xi

Abstract………………………………………………………………………………x

1. INTRODUCTION.. 1

1.1 Basic Concept of Mortgage loans. 1

1.2 Mortgage System in Turkey. 2

1.3 History of Mortgage System in Turkey. 2

1.4 Research Aim and Objective. 4

1.5 Significance and Purpose of the Research. 4

2. LITERATURE REVIEW… 6

MORTGAGE SYSTEMS IN US, GERMANY, AND TURKEY.. 6

2.1  Mortgage systems in Developed and Developing Countries. 6

2.1.1 Mortgage Systems in the USA.. 6

2.1.1.1 Federal Housing Authority (FHA) 9

2.1.1.2 Federal National Mortgage Association (FNMA) 9

2.1.1.3Government National Mortgage Association (GNMA) 10

2.2 Mortgage in Germany. 13

2.2.1 German Mortgage System.. 14

2.2.1.1 Pf and Brief System.. 15

2.3 Mortgage in Turkey. 17

2.3.1 Turkish Mortgage Law.. 17

2.3.2Mortgage System of Turkey. 18

3: HOUSING FINANCE SYSTEMS. 21

3.1 Turkish Real Estate Market 21

3.1.1 Price Effect 24

3.1.2 Population Effect 24

3.1.3 Income Effect 25

3.1.4 Interest Rate Effect 26

3.2 Housing Finance History in Turkey. 26

3.3 General Types of Housing Finance. 29

3.4 The Direct Route. 33

3.5 The Contractual Route. 34

3.7 The mortgage bank. 37

3.8 Secondary mortgage markets route. 38

4: METHODOLOGY.. 41

4.1 Basic Concept of Conjoint Analysis. 41

4.2 Stages of Conjoint Analysis. 43

4.3 Objective of Conjoint Analysis. 46

4.4 Application of Conjoint Analysis. 47

4.5 Designing the Conjoint Analysis. 49

4.6 Conjoint Analysis Methodology Selection. 49

4.6.1 The Traditional Conjoint Analysis. 50

4.6.2 Adaptive Conjoint Analysis. 50

4.6.3 The Choice Based Conjoint Analysis. 51

4.7 Selecting the Appropriate Method of Conjoint Analysis. 51

4.8 Types of mortage and interest rate system offered by Turkish Banks used in the Study  53

4.8.1 Fixed Rate Mortgage. 53

4.8.2 Adjusted Rate Mortgage. 56

4.8.3 Balloon payment Mortgage. 57

4.8 Data Source and Data Collection. 58

4.9 Conceptual Model 58

4.10 Data Preparation for Analysis. 59

4.5 Data Collection through Survey Cards. 62

4.6 Chapter Summary. 66

5: ANALYSIS AND RESULTS. 68

5.1 Data Analysis. 68

5.2 Results. 76

6. Conclusion. 86

References: 89

List of Tables

Table  4.1 :Attributes and attribute levels of the Conjoint study……………..……61

Table 4.2: Attribute levels for a full-profile, fractional design conjoint study…..…62

Table 4.3: Responding Rating………………………………………………………67

Table 4.6:Criteria for the selection of Conjoint Analysis Methodology…………..49

Table 5.1:  Conjoint Study Design…………………………………………………70

Table 6.2: Respondent’s preference pathway………………………………………71

Table 5.3: Existing product profiles………………………………………………..74

Table 5.4: Market Share……………………………………………………………75
Table 5.5: Existing Product Profile………………………………………………..76

Table 5.6: Optimal product profiles……………………………..………………….77

Table 5.7: Market Share Simulation……………………………………………..…87

List of Figures

Figure 1.1 – Mortgage Interest Rate History in the US……………………………..11

Figure 1. 2 – Interest Rate on Mortgage after the year 2009………………………12

Figure 1.3 – Housing Ownership Rates for the US…………………………………13

Figure 1.4 – Pf and Brief System……………………………………………………16

Figure 2.1 – Comparison of GDP to Real Estate Growth…………………………..22

Figure 2.2 – FDI in Property and FDI Total………………………………………..24

Figure 2.3 – FDI in Property and FDI Total………………………………………..24

Figure 2.4 – Population Forecast……………………………………………………26

Figure 4.1: Algorithm of Conjoint Analysis……………………………………….45

Figure 4.2: Conceptual Model………………………………………………………60

Graph: 5.1.1: Predicted Market Share………………………………………………78

Graph 5.1.2: Optimal Product 2…………………………………………………….79

Graph: 5.2.3: Results of Optimal Product 2………………………………………..81

Graph 5.2.4: Results of Optimal product 3…………………………………………82

Graph 5.2.5: Results of Optimal product 4…………………………………………84

Graph 5.2.5: Results of Optimal product 5…………………………………………85

CUSTOMER PREFERENCES ON MORTGAGE FINANCE IN TURKEY,

A STUDY WITH CONJOINT ANALYSIS

ABSTRACT

The importance of an efficient housing finance system for every country cannot be neglected as it has its significance for meeting the demands of both the housing needs of the individuals and also the reinforcement in developing the finance, construction and the sectors related to these markets.

However, Customer Preferences on Mortgage Finance in Turkey for the major reasons being the unavailability of macroeconomic stability in these countries. there has been a significant development in the housing finance sector of Turkey. One of the major development is the mortgage system development along with the new Mortgage Law approved by the Parliament.

Still, the purpose of this thesis is to analyze the mortgage system in Turkey and also to highlight the factors that influence the choices and preferences of the consumers while they decide to take housing mortgage.

The research provides an in-depth analysis of the preferences of the consumers with regards to the mortgage system in Turkey. The data was collected through primary source where the respondents were asked to provide their response based on 16 cards that contain a combination of available options in the mortgage markets for the consumer to choose from.

The respondents were asked to rank each card according to their preferences. The cards were formed using the Microsoft Engineering tool on the excel software. The data collected was then used to perform conjoint analysis that provided an in depth information about the preferences of the consumers.

The mortgage market in Turkey is getting developed day by day as more and more people in Turkey are willing to own their own residency along with the increase in the number of refugees. However, This has resulted in the development of the housing finance system especially the mortgage system in Turkey.

Therefore, this research has significant importance to provide the players of the housing finance market of Turkey to know what are the preferences of the consumers willing to take loans for owing their residency in the Turkey.

Keywords. Mortgage, Housing finance , conjoint analysis

1. INTRODUCTION

The housing finance is a very broad topic whose concepts may vary based on different continents and regions. The housing finance system of any country can bring together a multi-sector and a complex issue that can be driven by the ever-changing features of the local community that may include the legal environment of the country, the culture of people residing in the country, the economic makeup, environmental regulatory system or the country’s political system. (Loic&Lea, 2009)

The entire concept of house finance and housing finance system has been observed to evolve over the time. In mid 80’s the concept was rather regarding the residential mortgage finance system.

As discussed by Boleat, Mark (1985) that the sole purpose and objective of housing finance system is providing the home buyers with the finance required for purchasing their homes. The objective of housing finance is however simple but the ways in which it can be achieved is very limited.

In the recent years, there has been an introduction of a number of complex and difficult housing finance systems in countries but the essential feature of the housing finance system has been unchanged that is the ability of financial institutes to provide their clients with an opportunity to purchase their own residential home.

The house finance system is, however, in recent years, not limited to the residential mortgage finance but also includes the other forms of mortgage available for the consumers that may include developer’s finance, the finance for rental purpose, or microfinance that is applied for the housing purpose.  (Loic& Lea, 2009)

1.1 Basic Concept of Mortgage loans

With accordance to the Anglo-American property law, the term mortgage is used when the owner pledges their interest, having the right of the property, as security or in relation to the loan applied for. The main purpose of the mortgage is to acquire money or loan by securing it with the owner’s property.

The mortgage is the primary lending mechanism that is being used in a number of countries in order to finance the ownership of residential along with the commercial property in the country.

However, there might be the difference in the terminologies and the terms that are being used in various countries, along with the different mortgage options available to the consumers in the market to acquire from the financial institutes.

The government, in most of the countries, regulates the mortgage system directly or indirectly. Other than this, the system of mortgage in any country can be based on the historical, regional or even derived from the specific characteristics associated with the legal finance system in the country. (Cobandag, 2010)…………………continued