The rise in apartment prices has forced buyers to borrow more money. The average mortgage taken by Israelis in 2009 was NIS 670,000, 13.5% more than the average mortgage of NIS 590,000 in 2008, according to a TIM Mortgage Brokerage Ltd. survey for "Globes".
The average life of a mortgage shortened to 18 years in 2009 from 21 years on mortgages taken in 2008. The average mortgage interest rate fell from 4.2% in 2008 to 3% in 2008, However since the average mortgage amount increased and life of a mortgage shortened, the average monthly payment rose 10% to NIS 4,018 in 2009 from NIS 3,650 in 2008.
TIM co-CEO Eyal Leibovich says that for a couple to meet its monthly mortgage payments throughout the mortgage period, they must earn at least four times the payment. "A young couple that buys an apartment today needs a joint monthly income of NIS 16,000, but the average household income is currently NIS 12,500. On the face of it, this means that most mortgage-holders are classified as at risk," he says. "The banks tend to approve loans that exceed the desirable model, relying on the borrowers' future earning potential."
Published by Globes [online], Israel business news - www.globes-online.com - on January 10, 2010
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