Mortgage restrictions by the Bank of Israel have had no effect on the real estate market, and homebuyers are continuing to take large mortgages, partly because of the low interest rates, indicate figures that the Bank of Israel published today.
Homebuyers took NIS 46.6 billion in new mortgages in 2012, 4% more than in 2011, and close to the previous record of NIS 47 billion set in 2010. The banks' aggregate mortgage portfolio was NIS 227 billion at the end of 2012.
The public took NIS 4.66 billion in new mortgages in December, 13% more than the NIS 4.1 billion in new mortgages in November, and up from the NIS 3.38 billion taken in October. New variable interest mortgages rose by 13.6% to NIS 3.53 billion in December from NIS 3.1 billion in November, while new fixed-interest mortgages rose to NIS 1.13 billion from NIS 996 million.
The Gazit-Globe Center for Real Estate Institute at the Interdisciplinary Center Herzliya says that home prices on the coastal plain rose 35-36% in 2007-11. Ashdod saw the biggest rise, at 56%. Home prices rose by 39% in Tel Aviv in 2007-11 and by 74% in 2000-11.
According to the latest Bank of Israel figures for the end of November, 65.2% of mortgages taken in 2012 were for properties costing more than NIS 1.2 million, of which 29% were taken for properties costing more than NIS 2 million.
In October, the Bank of Israel imposed new mortgage restrictions, capping the loan-to-value (LTV) ratio at 75% for first homebuyers, 70% for buyers of bigger homes, and 50% for investors. The new restrictions have not yet affected the real estate market, but it is premature to declare that they will have no impact.
Published by Globes [online], Israel business news - www.globes-online.com - on January 13, 2013
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