Despite the limited number of work days in September and October, due to the Jewish holiday season, mortgages continue to be granted at a high rate. According to estimates by the banks, NIS 3.2 billion in new mortgages were granted in September. While this appears to be a sharp drop from the all-time high of NIS 5.8 billion in new mortgages granted in August, September had fewer working days. The amount of new mortgages in September was 7% more than in September 2011.
According to data now being collected, there has been a slight decline in the proportion of highly leveraged mortgages with loan-to-value (LTV) of over 60%, which declined to 40.5% of all mortgages in September from 45% in August.
Preliminary data show that NIS 1 billion in new mortgages have been granted since the beginning of October. Since there have been only three full work days so far this month, as well as three short work days during the Sukkot holiday, the figure is considerable. Some banks say that the pressure at mortgage bank branches, which began in the summer, is still being felt.
The housing market has been heating up again in recent months. From May, the amount of new mortgages rose steadily to peak in August. Mortgage market sources say that investors are mainly driving the increase in mortgages. Real estate sources add that home prices are rising in some parts of the country, correcting from the drop in prices over the preceding year, especially for new homes.
The Bank of Israel is monitoring with concern the renewed heating up of the residential market. It has already proposed measures to cool the market down, and for some time it has been considering additional steps, such as banning high LTV mortgages. However, it is no hurry to use these tools, which are liable to have extreme repercussions for the economy.
Published by Globes [online], Israel business news - www.globes-online.com - on October 15, 2012
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