Mortgage rates rise halts

mortgages
mortgages

The average interest rate on index-linked mortgages fell from 3.93% in March to 3.88% in April.

Like the volume of housing deals, the volume of mortgages has fallen in recent months, but it is premature to say that the residential housing market trend has reversed. The decline resulted from a reduction in housing market activity by investors (following a tax hike) and from investors entitled to participate in buyer fixed price lotteries sitting on the fence.

The mortgage interest rate, which has been rising for the past two years, remained almost unchanged in April (this refers to mortgages closed in March for implementation by April 18), according to Bank of Israel figures. The average interest rate on index-linked mortgages fell from 3.93% in March to 3.88% in April. The interest rate on popular 15-20-year unlinked mortgages was up from 4.19% in March to 4.25% in April, and the interest rate on 20-25-year unlinked mortgages rose from 4.23% in March to 4.34% in April. The interest rates on shorter mortgages were mostly down.

It should be noted that the index-linked mortgage rate reflects an overall cost of 5-6% annually. According to the target set by the Bank of Israel, the CPI is set to rise by 1-3% a year. Assuming a 2% rise, the midpoint of this target, the total financing cost is 6% (mortgage interest rate plus the annual rise in the CPI). Even if the lower bound of the target range is used (the CPI has remained virtually unchanged for the past two years, and the forecast for the coming years is around 1% a year), the cost of financing is still 5% a year.

Published by Globes [online], Israel Business News - www.globes-online.com - on April 23, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018