Banking sources predict that the volume of new mortgages taken in July would reach NIS 5.5 billion or even more, nearly 20% more than the monthly average of NIS 4.6 billion over the past 12 months.
The summer is usually a peak time in the mortgage market, with many people preferring to close deals before the start of the school year, so August is likely to be a strong month. At the same time, the NIS 5.1 billion in new mortgages taken in July 2017 is still 7% less than the projected figures for July 2018.
Another important reason for the rise in new mortgages is the Buyer Fixed Price Plan. The banks say that the mortgage market is becoming livelier because deals from the plan are entering the system.
Mortgages were taken in recent months by the first winners in the plan in late 2016 and early 2017 who initially used their own money. Only now, after the contractor is getting organized, are they taking mortgages.
It is believed that apartment purchasers under the Buyer Fixed Price Plan currently account for 10% of the mortgage market, but their proportion is growing. The banks believe that the proportion will reach 20% of the market within a year.
The mortgages market has been waking up in recent months. Over NIS 5 billion in mortgages was taken in both March and May, while the lower figure for April resulted from the fewer working days in that month because of the Passover holiday.
No official figures have been published for June yet, but source said that total mortgages would probably again top the NIS 5 billion figure. At the same time, July is emerging as a peak for the past year with a total of NIS 5.5 billion.
It is premature to summarize 2018, but it is emerging as a strong year in the mortgage market, after mortgages declined 10% in 2017, compared with 2016.
Also worthy of note is the fact that while demand for mortgages is growing, the mortgage interest rate is remaining stable, with interest rates for the various types of mortgages remaining at more or less the same levels as they were six months ago. The reason is that the large banks have reached the capital adequacy ratio targets set by the Bank of Israel and are therefore becoming more aggressive in this market, causing a rise in competition and halting the increase in mortgage interest rates seen in recent years.
Published by Globes [online], Israel business news - www.globes-online.com - on July 25, 2018
© Copyright of Globes Publisher Itonut (1983) Ltd. 2018