The proposal by MK Orly Levi-Abekasis to allow mortgages for first apartment purchasers up to 90% of the value of the apartment was approved today by the ministerial legislative committee, despite opposition from the Ministry of Finance.
Levi-Abekasis welcomed the committee's decision, saying, "This is important news for hundreds of thousands of young couples on the way to their dream of their own apartment." The committee decision, which followed a tough struggle and opposition from the ministers from the Yesh Atid party, was supported by ministers from the Yisrael Beitenu party, Ministers Uri Ariel and Uri Orbach from the Jewish Home party, and Ministers Gilad Erdan and Limor Livnat from the Likud party. The bill will be brought to the Knesset plenum for its preliminary reading this Wednesday.
Levi-Abekasis asserts that Ministry of Finance officials who oppose the bill for amending the Mortgages Guarantee Law have taken action in recent days to persuade Minister of Finance Yair Lapid and other ministers not to support the bill in the ministerial legislative committee. Levi-Abekasis nevertheless pushed the 90% mortgages bill as hard as she could, and alleges that the Ministry of Finance officials are engaged in misrepresentation.
"This bill, which is aimed at decreasing the money that a young couple needs to buy an apartment, is based on mortgage market research and opinions of economists and academics, and is backed by a Sisyphean study by researchers from the Knesset Research and Information Center," Levi-Abekasis stated.
"This amendment in the law is likely to open a door to hundreds of thousands of young couples lacking the money needed to even begin the process of buying an apartment, in contrast to initiatives like the 0% VAT bill, under which apartment buyers must still pay with their own money for over 30% of the apartment's value. In other words, the Minister of Finance prefers to make a gift to those who already have capital, while ignoring those who can make a monthly mortgage or rent payment, but cannot overcome the high capital barrier required today to buy an apartment in Israel."
The Ministry of Finance warns that the proposal will cause a further rise in housing prices, increase the debt of young couples, and will jeopardize the economic future of many households. Ministry of Finance officials are even warning about the creation of a sub-prime mortgages market, as was the case in the US.
Published by Globes [online], Israel business news - www.globes-online.com - on November 16, 2014
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