The Bank of Israel is imposing new restrictions on mortgages today, amid the continued rise in home prices and in the amounts of mortgages being taken out.
Supervisor of Banks David Zaken distributed a draft guideline to the banks today that calls for a larger capital cushion against the mortgages they grant to homebuyers.
The guideline states that, beyond the targets set by the Supervisor of Banks for tier 1 capital for banking corporations (9% by 2015 and 10% by 2017 for the two largest banks), the banks will have to increase their tier 1 capital by an amount representing 1% of their credit for housing. The date set for meeting the capital target set in the guideline is January 1, 2017, with implementation in stages.
"The draft guideline is being published in the light of the continued growth in housing credit and its proportion of the total banking credit portfolio," the Bank of Israel said today, "The aim of the guideline is to enlarge the capital cushion that the banking system allocates against its housing credit portfolio, because of the rise in the risks inherent in this portfolio, and thereby strengthen the banks' ability to absorb unexpected losses, and reinforce financial stability in general."
Published by Globes [online], Israel business news - www.globes-online.com - on September 14, 2014
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