The real estate market boom in the past two years has resulted in a 56% increase in the value of new mortgages. At the same time, the average apartment price has risen 30%, the Bank of Israel reported today.
New mortgages totaled NIS 65 billion in 2009, up from NIS 41 billion in 2008.
The figures indicate that the low prevailing interest rate caused borrowers to prefer variable rate mortgages, which accounted for 77% of all new mortgages in February 2009, an all-time high. Later during the year, as expectations grew that the interest rate would be raised, the proportion of variable rate mortgages fell to 51% of all mortgages.
"Household debt relative to disposable income was unchanged at 60% in Israel, lower than in other countries, such as the US, the UK, and eurozone countries," said the Bank of Israel. "The rise in monthly interest payments on mortgages following interest rate hikes in 2010 is not expected to have a material effect on private consumption or stability of the banks."
Published by Globes [online], Israel business news - www.globes-online.com - on March 23, 2010
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