Zero interest in the Israeli economy has set the mortgage market on fire, according to data published today by the Bank of Israel. Mortgage taking jumped 21% in March to NIS 5.6 billion, up from NIS 4.6 billion in February, and NIS 4.5 billion in March 2014.
The March mortgage taking figure was the highest over the past year and one of the highest amounts taken in one month in recent years. The only time mortgage taking came close to this figure recently was in December, when mortgages worth NIS 5.5 billion were taken, immediately following the scrapping of former Minister of Finance Yair Lapid's 0% VAT plan.
The high March amount of mortgage taking includes mortgage recycling. The Ministry of Construction and Housing is encouraging the recycling of mortgages and has extended the program for those entitled to recycle mortgages through to the end of August, due to a low response to date.
March mortgage taking showed a widening gap between fixed and variable interest rate mortgages. After years in which mortgage takers preferred variable rate mortgages, over the past year the gap has narrowed and since January fixed mortgages has been the preferred financial instrument due to low interest rates. While in January and February the preference for fixed rate mortgages over variable rate mortgages was narrow - less than NIS 200 million - in March the gap widened to NIS 500 million.
Of the new mortgages taken in March, NIS 3.05 billion was in fixed rate mortgages and NIS 2.55 billion in variable rate mortgages. Mortgages worth NIS 3.57 billion were not linked to the Consumer Price Index (CPI), while NIS 1.95 billion in new mortgages were linked to the CPI.
Published by Globes [online], Israel business news - www.globes-online.com - on April 13, 2015
© Copyright of Globes Publisher Itonut (1983) Ltd. 2015