There is massive pressure by mortgage bank customers today, the day after the Bank of Israel announced new mortgage restrictions, which will come into effect on Thursday. Banks are reporting extraordinary crowds of customers seeking to open a mortgage file before the new restrictions come into effect.
A mortgage official at a bank in central Israel told "Globes", "There has been a rush since the bank opened. People were waiting outside 20 minutes before we opened. I have only ten minutes to speak with a customer, and people are seeking mortgages of NIS 650,000-700,000. We have a week of work today, as if we're selling a six-pack of yogurt on sale."
In response to the pressure, Union Bank of Israel (TASE: UNON) is extending its business hours to 4 pm today.
Yesterday, the Bank of Israel published a directive prohibiting banks from approving mortgages with a loan-to-value (LTV) of more than 70%. An exception will be made for first-time buyers who will be allowed up to 75% of the value of the apartment. The directive establishes even stricter conditions for mortgage takers buying an apartment for investment, limiting the LTV to 50%. Homes for investment include second apartments and apartment bought by non-residents.
Published by Globes [online], Israel business news - www.globes-online.com - on October 30, 2012
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