Despite the Jewish holiday season, NIS 6.6 billion in new mortgages were granted in September-October 2012, the Bank of Israel reported today. In October (which included the Sukkot holiday), just before the Bank of Israel's new mortgage restrictions came into effect, homebuyers took NIS 3.8 billion in new mortgages, 4.4% more than in September (which including Rosh Hashana and Yom Kippur).
Compared with the months of the Jewish holiday season last year, new mortgages rose by 22% from the NIS 5.4 billion in September-October 2011. July-August 2012 were record months in the mortgage market, with NIS 4.9 billion and NIS 5.8 billion in new mortgages taken, respectively.
Variable interest mortgages in October totaled NIS 2.57 billion, 76% of the total mortgages granted during the month.
In late October, the Bank of Israel announced new restrictions in the mortgage market, which came into effect on November 2. Buyers of first homes can take mortgages with a loan-to-value (LTV) ratio of up to 75%, people selling one home and buying another can take mortgages with an LTV ratio of up to 70%, and investors are limited to an LTV ratio of 50%. Governor of the Bank of Israel Prof. Stanley Fischer has not yet used his ultimate weapon - an across-the-board cap on leveraged mortgages.
The day after the directive was announced, and before it came into effect, some banks saw heavier than usual demand from customers, and some banks extended their hours and beefed up their mortgage staffs. Many customers called to ask about the new directive, and many others rushed to secure agreements in principle on mortgages before the restrictions went into effect.
Published by Globes [online], Israel business news - www.globes-online.com - on November 12, 2012
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