A temporary cooling, or are the Bank of Israel's measures starting to take effect? Preliminary figures for new mortgages in January 2013 show that the banks lent NIS 3.97 billion in mortgages, 14.8% less than in December 2012.
This is the first time since September-October 2012 that the amount of new mortgages in a month has fallen below NIS 4 billion. Given that the Jewish holiday season fell in September-October last year, resulting in fewer new mortgages, excluding these months, the January figure is the lowest since June 2012.
In November 2012, the Bank of Israel's new mortgage restrictions came into effect. The measures are intended to reduce the leverage of homebuyers, especially real estate investors. Under the new mortgage restrictions, buyers of second or more homes (investors) must provide 50% equity. Existing homeowners moving to new homes must provide 30% equity, and first-time buyers must provide 25% equity. The mortgage covers the rest.
In the past few months, mortgage market sources estimated that the Bank of Israel's new measures would take time to have an effect, but it is still premature to assess on the basis of figures for one month whether January was a U-turn in the mortgage market - the month in which the measures have begun to cool the housing market - or if seasonal factors explain the January figures.
NIS 1 billion of the new mortgages in January were fixed-interest mortgages, and NIS 2.9 billion were variable interest mortgages. The proportion of variable interest mortgages fell to 74% of total mortgages in January from 76% in December. Later this month, the Bank of Israel will publish detailed mortgage figures for January, including data on financing rates and mortgages in arrears.
In 2012, the banks granted NIS 46.8 billion in new mortgages, 4% more than in 2011, and close to the 2010 record of NIS 47 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on February 11, 2013
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