"We saw buyers return to the market in the second quarter. Homebuyers were waiting for prices to fall, but only saw a negligible drop. This is reflected in the number of sales," Leumi Mortgage Bank CEO Shuki Burshstein told "Globes" today, to explain the increase in new mortgages granted during the quarter.
Bank Leumi (TASE: LUMI) subsidiary Leumi Mortgage Bank reported 57.4% net profit growth, compared with the corresponding quarter of 2011, to NIS 85 million for the second quarter. First half net profit rose 24.3% to NIS 155 million from NIS 113 million for the corresponding half, on 37.2% growth in financing income to NIS 312 million from NIS 251 million.
"Globes": How will the expected economic slowdown affect mortgage in arrears?
Burshtein: "There is a link between the unemployment rate and the amount of arrears, and, obviously, if we see unemployment rise strongly, we'll see an increase in arrears. However, we and the other banks do not normally grant loans at very high leverage levels, preferring reasonable financing levels."
There are assessments that the Bank of Israel is liable to ban highly leveraged loans. How will this affect the mortgage market, if it goes ahead?
"Naturally, capping financing levels will affect people without equity. There will be people who will struggle to buy an apartment. Nonetheless, I am unaware of any such intention by the Bank of Israel."
You've said in the past that you will tighten lending terms. Will this affect your market share?
"No, because the other banks have taken similar measures, so our market share is stable."
Leumi Mortgage Bank has a quarter of the mortgage market. It granted NIS 5.6 billion in new loans during the first half, 6% less than in the first half of last year. Its mortgage portfolio totaled NIS 57 billion at the end of June, up 5% from the end of 2011.
Published by Globes [online], Israel business news - www.globes-online.com - on August 8, 2012
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