Not even Operation Pillar of Cloud could stem Israel's mortgage market. Preliminary figures obtained by "Globes" state that NIS 4.2 billion in new mortgages were granted in November 2012, 50% more than in November 2011, and 30% than in October 2012, which included the Sukkot holiday.
Mortgage industry sources say that there was a drop in new mortgages during Operation Pillar of Cloud, especially in the south, but that this was not enough prevent strong mortgage figures. The sources also believe that December will be stronger than November, because homebuyers who can present a bank with a contract before the end of the year can obtain a mortgage even if they do not meet the new Bank of Israel restrictions.
The new mortgage restrictions, which came into effect on November 1, have not yet had much effect on the market, but it is premature to declare that they will have no impact. Banks believe that it will only be possible to assess whether restrictions succeeded in cooling the real estate market in a few months. The banks expect a drop in new mortgages in early 2013, partly because this is a slow season, and partly because the restrictions will begin to have an effect on the market.
The sources add that there was a jump in customers calling call centers to learn about the new restrictions and their effect on bank customers.
Even after issuing the new mortgage restrictions, Governor of the Bank of Israel Prof. Stanley Fischer has not yet used his ultimate weapon: a sweeping cap on high loan-to-value (LTV) mortgages. However, if the amount of new mortgages continues to grow in the coming months, he may take tougher measures.
The Bank of Israel today reported that 42.1% of new mortgages in October had an LTV ratio of over 60%, compared with 42.3% of new mortgages in October 2011.
Published by Globes [online], Israel business news - www.globes-online.com - on November 28, 2012
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