The Bank of Israel today published mortgage figures for December 2016. Mortgages taken in December totaled NIS 4.697 billion, about the same as the NIS 4.676 billion taken in November 2016, but down sharply, compared with the NIS 5.635 billion taken in December 2015.
NIS 2.13 billion of the mortgages taken in December were at fixed interest and NIS 2.567 billion at variable interest.
The Bank of Israel yesterday warned that rising interest rates were liable to undermine financial stability among households. "If the mortgage interest rate goes on rising, housing prices continues on their upward path, and household income does not increase, the proportion of income spent on repaying mortgages will rise, which is liable to undermine the financial stability of households," the Bank of Israel financial stability report states.
The Bank of Israel emphasized that the effect would be particularly harsh for the economically disadvantaged, warning "If this scenario is accompanied by an increase in the Bank of Israel interest rate, the risk of borrowers' insolvency, especially among the bottom income deciles, will grow, because these borrowers are more exposed to unemployment and changes in the variable interest rate."
The mortgage interest rate for the various types of mortgages has risen substantially over the past 18 months, following regulatory restrictions imposed on the banks by the Bank of Israel. The steep rise in these interest rates has also led the Antitrust Authority to commence an assessment of the matter.
While the mortgage interest rate has been climbing, demand for mortgages has been easing slighting in recent months. The market is expected to remain stable in January, with NIS 4.5 billion in new mortgages projected. The various banks are responding to these developments in different ways.
Published by Globes [online], Israel Business News - www.globes-online.com - on January 25, 2017
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