Rising interest rates: When the dream of an apartment becomes a nightmare of a mortgage becomes more expensive

"My big fear is that we will not be able to meet the mortgage repayment if everything else works out but that's the scary part without a doubt."

The rise in interest rates last week raised mortgage repayments for those who until about a month ago were considered the lucky ones who managed to buy an apartment.

We went to hear those who are beginning to fear that they will not meet the refund

Between Ashkenazi

31/05/2022

Tuesday, 31 May 2022, 14:13 Updated: 14:29

• Share on Facebook

• Share on WhatsApp

• Share on Twitter

• Share on Email

• Share on general

• Comments

  Comments

The decision of the Governor of the Bank of Israel, Amir Yaron, to raise the interest rate last week to 0.75% affects the pockets of all of us, but mortgage borrowers, who feel the interest rate environment is changing for the worse - especially when they understand that more interest rate hikes are planned later this year. Horrors.

Most mortgages are linked to the prime interest rate - that is, the interest rate set by the Bank of Israel, plus 1.5%.

The increase in the prime interest rate increases the monthly repayment of existing mortgage holders by an amount of about NIS 50 for each increase of 0.25%.

In other words: the average mortgage has risen in price by tens of thousands of shekels and the monthly repayment by hundreds.

We went to meet two couples who until recently were the object of envy among their friends, having managed to purchase their own apartment.

The mortgage, needless to say, was adjusted to their repayment ability.

They knew they would have to work hard for the next 20-30 years for the apartment to become their sole and full ownership, but they did not imagine that the loan they took from the bank would become more expensive.

It should be emphasized: everyone who spoke to us in the article is not too afraid of losing the apartment.

They continue to pay the monthly repayment in order - and it may be that in the end it will end up with a few hundred shekels more per month.

They also understand that raising interest rates is meant to fight inflation, which would also have a negative effect, perhaps even more so, not only on the mortgage but on all monthly expenses.

Despite this it seems that what scares them is not only the impact on the standard of living, but mainly the different concept: they thought of the mortgage as something permanent in their lives and did not imagine that it might change for the worse.

Good to know (promoted)

The solution to knee pain is closer than ever - thanks to technology in the shoe

Served on behalf of Apostrophe Therapy

Save on a monthly budget to maintain your home (Photo: ShutterStock)

Vered and Michael from the center of the country: "Thank God we got help from the parents. They actually provided us with the initial capital, so we were able to take out a mortgage, without it there was nothing to talk about. Our monthly repayment is around 5,000 shekels a month, and suddenly we notice the amount starts to rise "For a few hundred shekels. It is possible that some readers will raise an eyebrow and say that we are crying, but for a young couple who is building a family and building a career, any such increase is significant."

Vered adds: "By and large we are tired of living in the red (which also became more expensive as a result of the interest rate increase. BA), we do manage to close it but it's living on the scales and it's not pleasant. Our child. "

Michael intervenes and says: "My big fear is that we will not be able to meet the mortgage repayment, with everything else we will get along but that's the scary part, without a doubt."

The main concern stems from the fact that what was apparently clear, known and fixed in the family budget, has become variable and threatening (Photo: ShutterStock)

"I depend on other people"

Both David and Gitit, also from the central region, share their feelings with the increase in the monthly repayment.

David says: "We took out a mortgage on an apartment in the center of the country because we did not want to pay more rent of NIS 4,000 in Jerusalem and I already feel the increase in interest rates."

David adds: "Obviously there is a fear that I will not meet the mortgage repayments, I depend on other people and not myself. After all, no one asks me before deciding whether or not to raise the interest rate. I heard in the media about the interest rate increase and checked how much I repay each month. "At the moment we are getting along, but the question is what will happen next. After all, no one guarantees us what will come next."

David stops, takes a breath and concludes: "I thought I took a mortgage on a certain route with a certain payment schedule and I thought I had peace for thirty years. Suddenly after two years I'm in the middle of paying I see the figures change. So I stand for repayment, but if I thought I'm going to pay for the next thirty years, not anymore. "

• Of money

• Our money

Tags

• Mortgage

• Apartment

• interest

• Bank of Israel

• inflation