Israel’s mortgage market remained strong last month as home buyers took out mortgages totaling NIS 8.4 billion in August, according to the Bank of Israel. Mortgage takeouts last month fell 7% in July, when more than NIS 9 billion were taken out, but were 20% higher than in August 2023.
Concerns about inflation are affecting the type of mortgage loans, with only 23% of mortgage loans linked to the Consumer Price Index (CPI) compared to 33% eighteen months ago, a historic low.
RELATED ARTICLES
Mortgage lending exceeded NIS 9b for the first time since 2022
The average interest rate on CPI-linked mortgages is 3.3%, compared to an average interest rate of 4.9% on unlinked mortgages.
Note the balloon loans
Short-term balloon loans taken out by contractors continue to reach record amounts. These are bridging loans that use popular financing deals where apartments are purchased with a particularly low down payment at contract signing (only 5% to 20%) and the balance is paid only during occupancy, when the apartment is built. According to information, 1.4 billion manats were withdrawn for such loans in August. In August 2023, balloon loans were significantly lower, totaling NIS 629 million.
The Bank of Israel has previously warned of risks associated with this activity, including in cases where buyers may not be able to pay high fees after occupancy, as well as liquidity risk for companies that do not have high returns. actually “seeing” money for a long time.
Globes, Israel business news – en.globes.co.il – published on September 10, 2024.
© Copyright 2024 by Globes Publisher Itonut (1983) Ltd.
