||Dissertation employs qualitative/quantitative approaches to define problems and to develop suggestions for Turkish mortgage market and housing finance system. In qualitative analysis, we define that existing mortgage system has not provided sufficient background for both market development and solution of housing question of mid/lower income groups. Lack of efficient subsidy scheme and income/wealth constraints of the households are essential reasons of this failure. Research also suggests that an integrated mechanism, involving market based housing supply/finance mechanism and Housing Development Agency’s (TOKI) system, would be useful to develop institutional housing finance and to solve housing puzzle of mid/lower income groups. In quantitative analysis, we scrutinize causal relationship between volume of housing credit and macroeconomic indicators over the period (2005: 01)-(2011: 09). By using monthly data, we employ ADF, VaR analysis, cointegration analysis, VECM, Granger causality tests, impulse-response functions and variance decomposition models. Below conclusions may be drawn from the emprical research. First, housing credit is negatively cointegrated with housing credit real interest rate (RFO) and positively cointegrated with the monetary aggregate (M2), residential buildings floor area according to occupancy permits (KI), and real GDP per person (KB). The findings generally suggest that mortgage market has complicated interactions with macroeconomy. Secondly, it is determined that occupancy permit, as proxy of housing demand and activity level of housing market, is the most critical policy instrument and performance indicator of Turkish housing market. Moreover, based on determinations on M2/KB, findings suggest that policies aim to minimize income/wealth inequalities may also support housing credit growth and hence development of institutional housing finance in Turkey.