In its Financial Stability Report for the first half of 2021, the Bank of Israel mentions both the rise in mortgages and credit to builders and contractors.
The Bank of Israel warns on the exposure of banks to the real estate sector in in its Financial Stability Report for the first half of 2021. The warning follows the news yesterday that the Israeli public took mortgages totaling NIS 11.5 billion in July just below the all-time record of NIS 11.6 billion worth of mortgages taken in June. All the signs are that a record NIS 100 billion in mortgages will be taken in 2021, up from NIS 78 billion in 2020, which was itself a record year.
All this is part of the large rise of credit extended to the public of 9.1% over the past year, after average growth of 5.2% between 2018 and 2020. Credit for housing grew by 9.7% over the past year and comprised 82% of the growth in credit. In March 2021, 52.5% of banking credit to the public was for housing.
However, the main risk to the banks comes from credit extended to builders and contractors rather than mortgages. "The risk is reflected in exposure to the construction and real estate industry, which remains significant, and stems first and foremost from the scale of the credit to the industry, its high weight in the credit portfolio and the high correlation between credit for housing, whose size in the credit portfolio has also grown."
Published by Globes, Israel business news - en.globes.co.il - on August 11, 2021
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Construction Photo: Tamar Matsafi
Guy Ben Simon and Roi Weinberger