Israel's banks granted NIS 5.143 billion in loans for housing in January 2019, according to figures from the Bank of Israel. This is 12% less than the volume of mortgages in December 2018, but 12% more than in January 2018, continuing the surge in mortgages in the second half of 2018.
The figures indicate that the stagnation that prevailed in the real estate market in 2016 and 2017 has lifted somewhat in recent months. Reviews published by the Central Bureau of Statistics and the Ministry of Finance chief economist show that the number of deals jumped in the second half of 2018, among other things due to the Buyer Fixed Price Plan.
Another important finding is continuation of the trend towards taking mortgages with relatively high leverage. One third of all mortgages taken in January had leverage of at least 60%, the same proportion as in December 2018. The ratio of the monthly mortgage repayment to income has also been increasing, reaching 26.5% in recent months.
At its peak in the second half of 2015, the volume of mortgages reached NIS 6.5-7 billion a month. It then fell as a result of the Ministry of Finance's policy in the housing market, which featured increased taxation on investors in housing and purchasers of luxury housing, and the Buyer Fixed Price Plan. The monthly volume of mortgage taking exceeded NIS 5 billion only three times between September 2016 and April 2018. In May 2018-January 2019, on the other hand, the volume of mortgages exceeded NIS 5 billion every single month.
In December 2018, mortgages reached their highest level in three and a half years: NIS 5.834 billion. The number of loans jumped from 7,200 in November 2017 to 8,400 in December 2018, then declined to 7,600, still a fairly high number.
These figures are consistent with, although they do not directly correspond to, a recent Bank of Israel study analyzing the changes among young buyers of a first home according to income level in 2007-2016. The analysis shows that the proportion of wage earners in the 25-35 age bracket buying a home for the first time rose from 2% in 2007 and 2008 to 4% in 2015 and 2016. The study emphasized that this pattern did not reflect a decline in the economic burden of young households, because one of the reasons for it was a longer repayment period. It is also possible that less is being spent on purchasing homes.
Published by Globes, Israel business news - en.globes.co.il - on February 28, 2019
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