The Bank of Israel estimates that the interest rate in the economy will be 1.5% within a year

Along with the update of the interest rate announced today by the Governor of the Bank of Israel, the Bank estimates that the interest rate will continue to rise, in a few beats, up to 1.5%.

This means a prime interest rate of about 3%, double what we have known until today, in a very bad line for credit consumers, including mortgage holders

Liat Ron

11/04/2022

Monday, 11 April 2022, 16:18 Updated: 16:40

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The Bank of Israel took the required step today and raised the interest rate in the economy by a quarter of a percent, from 0.1% to 0.35%.

However, the ink has not yet dried over this announcement and the bank signals, in the forecast it publishes, that the interest rate in the economy will continue to rise to about 1.5% (according to some analysts, who are not part of the Bank of Israel, the rate may even be slightly higher).

The Bank also estimates that inflation in 2022 will be 3.6%, and growth will be about 5.5%.

For 2023, the central bank estimates that inflation will fall to around 2% per year.

The significance of the bank's assessment is that we expect further interest rate hikes in the coming months.

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With an interest rate increase of 0.25%, it is still easy to deal with, but when the interest rate in the economy reaches 1.5% and the prime interest rate reaches 3%, the mortgage repayment will become heavier (Photo: Official website, Bank of Israel spokeswoman)

It should be noted that this is particularly unpleasant news for credit consumers: high-holders in their checking accounts, borrowers for any purpose and, of course, mortgage holders, whose price is expected to rise sharply in almost any route chosen by the customer.

The monetary meaning is a higher monthly repayment, a higher annual repayment - and implicitly over the mortgage period, an addition of tens of thousands of shekels (and even more) to the total repayment.

In light of this information, it may be that mortgage holders who are also credit consumers in other sectors of their financial conduct (other loans, a framework designed to contain the "minus" in the account, car leasing, etc.), should think about refinancing the mortgage or moving to another loan repayment route. Their two months will adjust to their economic capacity, below the new interest rate - or at least until it returns to decline.

Mortgage account may be much larger (illustration) (Photo: ShutterStock)

CPA Amir Eyal, chairman of the Infiniti investment group

, says that if the governor decides to raise the interest rate several times by the end of the year and it reaches a level of 1.5%, those who took a loan of NIS 1 million will pay another NIS 15,000 a year. Lou where to return the money.

"We will also pay more for the deficit in the bank," says Eyal.

"When the prime interest rate goes up and we pay another five or there is a percentage, it can be significant. For those who have large debts, it is even worse. A loan with credit cards for debtors can also reach 12%.

In the end, the interest is a kind of tax "It falls mainly on the middle class and the low socio-economic class who take out mortgages. The intention is to make it harder for buyers to buy without an account and to cool inflation."

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• Interest rates in the economy

• Bank of Israel

• inflation

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• Bank of Israel Governor