2014 is ending with a bang in the mortgages market. The bank system estimates that mortgages taken in December totaled NIS 5 billion, making it the strongest month in 2014 in this sector, almost 20% above the NIS 4.2 billion monthly average for the year.
December is traditionally a strong month for mortgages. Banks step up their mortgage marketing in order to meet their targets for the year, and the month is a long one with no holidays (bank branches work as usual during Hanukah). The figures, however, are also good in comparison with December 2013, when mortgages totaled NIS 4.7 billion.
The banking sector believes that cancelation of the 0% VAT plan and early elections accounted for strong figures by making many people realize that there would be no dramatic measures to reduce the cost of housing in the near future. Elimination of the 0% VAT plan released a bottleneck, since quite a few housing buyers were sitting on the fence in recent months in anticipation of clarifications about the plan's implementation.
Since the program was withdrawn at the beginning of the month, the mortgage market has come alive, gathering momentum as the month progressed. The banks believe that the mortgage market will continue its momentum in January-February 2015.
Assuming that the official figure for mortgages in December is NIS 5 billion, the 2014 year-long mortgages figure will be NIS 51 billion, slightly lower than 2013's total of NIS 51.6 billion. The already low interest rate, which fell to only 0.25%, continued to fuel the mortgages market, and kept demand high. At the same time, former Minister of Finance Yair Lapid's announcement of the 0% VAT plan early in the year cooled the market off slightly, depressing sales of first apartments and also affecting the secondhand housing market.
Nevertheless, the mortgage market figures were positive, with a monthly mortgage-taking rate of over NIS 4 billion, and even Operation Protective Edge had almost no effect. The withdrawal of the 0% VAT plan, however again boosted market demand, with December projected to be the strongest month in the mortgage market.
Published by Globes [online], Israel business news - www.globes-online.com - on December 31, 2014
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