Last week, the Bank of Israel announced new mortgage restrictions, ordering the banks to increase their provisions for mortgage loans. Many analysts believe that the measure was a preemptive step ahead of an interest rate cut, in the hope of preventing a further heating up of the housing market. "The measure is intended to prepare for an interest rate cut," says Discount Bank chief economist Nira Shamir. "Economic indicators point to the slowdown continuing, along with low inflation and a strong shekel, which support another interest rate cut."
The Bank of Israel has cut the interest rate to its current level from 3.25% in 2011.
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