Of money
All articles
The apartment is moving away: those who do not have equity will not receive a loan from the bank
The Bank of Israel is reducing the possibilities for mortgage banks to grant loans to home buyers so that they can use them as "equity", and as a result, also the possibility for those who do not have sufficient equity to purchase their own apartment.
At the same time the bank is canceling the corona relief granted to mortgage holders
Tags
Mortgages
Bank of Israel
Banks
Corona
Sonia Gorodisky
Monday, 09 August 2021, 12:52 Updated: 13:10
Share on Facebook
Share on WhatsApp
Share on general
Share on general
Share on Twitter
Share on Email
0 comments
Against the background of the surge in apartment prices and the constant peak in taking out mortgages, the Bank of Israel announces today that the banks will no longer be able to provide a loan that will serve as "equity" for the purchase of a residential apartment. This refers to a loan secured by a residential apartment ("loan for any purpose"), which can no longer be considered as part of the equity for the purpose of purchasing a residential apartment.
This is a step designed to fight mainly the small investors in the real estate market who already own an apartment and they are leveraging it in order to get a loan that will be used as part of the equity.
This intention of the Bank of Israel was announced a month and a half ago, and in light of public criticism, the Bank of Israel has made its steps a little more flexible, so that housing developers can receive a bridging loan that will serve them for equity for up to two years.
Bridging loans will not exceed 30% of the value of the property purchased and will be for a maximum of 24 months.
At this stage, it is a draft of the public's reactions, which will probably take effect as early as the end of August.
More on Walla!
Sex life not satisfying?
This is how you will improve performance - in a special operation
To the full article
Meaning: Taking out a mortgage will become a much more complex task, for those who do not have sufficient equity (Photo: ShutterStock)
Will not cool the mortgage market
It is doubtful how much this move by the Bank of Israel will succeed in cooling the mortgage market, which is breaking new records month after month.
The Bank's intention is to reduce the number of investors in the housing market, the problem is that the biggest real estate investors do not hurt the king, because the owners of several apartments entering another bank category - business credit - with other restrictions applicable.
According to the Bank of Israel, the Bank is likely the source of funding They are from equity and not from a loan, so it will not be possible to take out loans from non-banking entities for the purpose of supplementing equity.
Yair Avidan, Supervisor of Banks (Photo: Bank of Israel Spokeswoman)
Repeal of corona regulations, part of recovery
In addition, the Bank of Israel announced today that it has decided not to extend the validity of the two exemptions housing loans given under the Temporary Order will expire on September 30, 2021:
(a) The temporary order allows increasing the rate of funding up to 70% loan for any purpose rather than to a rate of 50%;
(B) The Temporary Provision stipulates that the banks will not be required to increase the Tier 1 equity target by 1% in respect of housing loans granted during the Temporary Provision Period.
The Supervisor of Banks, Yair Avidan: "Today we published a number of steps for managing risks and exposures in the banking system. I am happy that after an ongoing dialogue we were able to find an outline that allows housing improvers to operate alongside some restrictions for those purchasing for non-investment purposes.
It is important that when making the loan and as part of a responsible underwriting process, the lending bank will use all the tools to get to know the customer's financial situation, including the use of a credit data sharing system.
In addition, we do not intend to extend the validity of the two concessions granted in the face of the corona - their return to a situation similar to the eve of the crisis, is part of the process of economic recovery and adaptation to economic management alongside the existence of the virus. "
Could the new regulations push home buyers to take expensive and risky non-bank credit?
(Photo: shutterstock)
Are apartment buyers being abused?
Meir Wieder, CEO of Wieder Mortgages
: “This is bad news for consumers in light of the fact that banks will no longer allow additional loans at the expense of existing assets, which will lead high-loan borrowers to consume expensive credit for a short period through commercial banks and credit companies. This procedure may lead to higher interest payments among borrowers and the sale of existing assets theirs. "
Welcome Fierstein, a member of the Association of mortgage advisors:
" Instead of making the order for big investors who hold five apartments and above, and instead allow the government to address the supply side, the Bank of Israel chooses to abuse Independents And buyers of second homes and pushing them into the arms of non-bank credit card companies, in order for them to pay higher and more significant interest rates than they could get in an orderly manner in the banking market.
Moreover, the haste of the Bank of Israel, which changes the policy immediately, without transitional provisions, will lead many buyers to breach of contract or take risky credit, in order to meet the commitments given before the directive takes effect.
The Bank of Israel is once again acting in a way that has been proven to be inefficient, and it is trying to cool demand by force, but is doing so through increasing the cost of credit to the general public.
We call on the bank's senior executives to introduce transitional provisions and reconsider the application of the policy, before it causes unnecessary damage. "
Share on Facebook
Share on WhatsApp
Share on general
Share on general
Share on Twitter
Share on Email
0 comments