Homebuyers took NIS 4 billion in new mortgages in February 2011, a figure indicating that the residential real estate market is still bubbling. The amount of new mortgages was 0.5% higher than in January and 26% higher than in February 2010, according to figures published by the Bank of Israel.
New mortgages have fallen 16% from their peak of NIS 4.8 billion in June 2010. Part of the reason is the interest rate hikes by the Bank of Israel, as well as the new restrictions it placed on mortgages beginning in July last year.
Governor of the Bank of Israel Prof. Stanley Fischer is expected to again raise the interest rate this evening. The prevailing view among economists is that he will raise the interest rate for April by 25 basis points to 2.75% tomorrow. A minority opinion predicts a 50-basis point rate hike because of Israel's high inflation.
The Bank of Israel says that 7,254 mortgages were taken out in February, 0.5% more than in January and 15% more than in February 2010, but 165 fewer mortgages than in the peak month of June.
Home prices have risen 16% in the past year and 60% (in nominal terms) since prices began climbing in May 2007. Consequently, the size of mortgages taken by homebuyers has increased, as the Bank of Israel figures show. The average mortgage was NIS 556,000 in February, similar to the average mortgage in January, but 9.6% higher than the average mortgage of NIS 507,000 in February 2010. The February figure is 1.2% less than the average mortgage of NIS 563,000 in the peak month of June.
Published by Globes [online], Israel business news - www.globes-online.com - on March 28, 2011
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