Experts are forecasting another increase in interest rate this month as inflation continues to rise. Rates could increase by 0.25% to 0.50% bringing the headline bank base rate to between 17.75% to 18.00%.

Good news for savers but not for the newly born Turkish mortgage market. Typical rates for mortgages are only a fraction of the base rate at around 2.5% but the impact of interest rate rises on loan repayments are proving too much for some borrowers. The recent rises in mortgage interest rates are being blamed for a property price reduction in Istanbul. According to reports investors tempted by the huge returns on property investments have borrowed to invest and now they want to limit their losses and are reducing prices. But in addition the growing credit boom in Turkey means those people maxed out on their credit cards will also have to pay more interest and this will reduce the cash they have available to buy or invest.

Will we see a similar trend in the property price reductions in Mugla? Maybe, as this weeks interest rate rise in the UK will also reduce the buying power of foreign investors.