Homebuyers swarmed the mortgage banks anew after the holidays. According to figures released by the Bank of Israel, mortgages totaled NIS 4.4 billion in October, a significant rise from September’s NIS 3.5 billion, though this comparison is problematic due to the Jewish holidays, which fell in September this year.
October’s total is 4.7% higher than this year’s monthly average, which is NIS 4.2 billion. Mortgages with variable interest rates totaled NIS 3 billion, and the balance was in fixed-rate mortgages. In October, interest rates were lowered by 0.25% to 1%, which further fueled the already high house prices.
In September, the Bank of Israel’s latest restrictions in the mortgage market took effect. The main restriction is the ban on mortgages for which the monthly payment represents 50% or more of the borrower’s monthly income. Because of the holidays, September was a month with relatively few work days, which makes October the first month in which we are able to see whether the restrictions impacted the market.
The banks indicated recently that the restriction would exclude only 2-3% of potential borrowers. “These restrictions have not shocked the market. Most borrowers who do not meet the criteria have found solutions in order to take mortgages, such as adding borrowers, or spreading the loan over a longer term, so the bottom line is that the market has been transformed by the mix of loans, but we don't see many customers pushed outside,” a source at one of the banks told “Globes.”
Published by Globes [online], Israel business news - www.globes-online.com - on November 11, 2013
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