Makes the price of money in Israel even more expensive.
Bank of Israel Governor Amir Yaron raises the interest rate for the eighth time in a row (Photo: Yehtz)
Expected, but painful: the monetary committee of the Bank of Israel decided to raise the interest rate in the economy by 0.5%, which will bring it to the level of 4.25%.
Of course, the prime rate also rises, respectively, to 5.75%.
This means that money continues to become more expensive in an effort to curb inflation, which reached a peak (since 2008) of 5.4%.
The estimate until not long ago was that the central bank would settle for a moderate increase in interest rates, by 0.25%, but the relatively high January index (0.3%) signaled that inflation is far from contained.
The reasons for the increase in inflation are varied, but mainly lie in the fact that the public has many savings left, some of which were accumulated during the Corona period when expenses were greatly reduced and the rest - a consequence of the growth in the economy, which reached its peak in 20212, but managed to surprise even during 2022. In view of all this, the governor had no
choice but to sharply raise the interest rate.
The change in the monthly repayment for a loan, from the previous interest rate - to the new one (Photo: Bank of Israel)
How much more expensive will mortgages and credit be?
It is difficult to accurately estimate the effect of the increase from today on mortgage repayments, since these differ from lender to borrower and from bank to bank, but it is enough to remember that the interest rate in the economy, less than a year ago, was only 0.1%, to understand the size of the drop.
In general, it can be said that those who take out an average mortgage will pay at least tens of thousands of shekels more than the original repayment amount (in many cases even a 6-digit sum, depending on the size of the loan and the route), while for some the monthly repayment has increased by at least hundreds of shekels during the period, for many it is already In the amount of NIS 1,000 or more every month, which makes the burden heavy and is expected to affect the other expenses.
A number of banks have already advanced a remedy for the blow, almost all of them have announced operations of freezing the interest rate increase on mortgages and spreading the debt that will accumulate in the garden into a large number of payments.
Previous steps taken were joined today by Bank Discount and Bank Mizrahi-Tefahot, who announced promotions on their behalf.
At the same time, it should be remembered that not only the borrowers are affected, but everyone who needs a loan or needs an approved credit line, which will also become more expensive.
The high interest rate also harms the ability of the business sector to raise capital for development and expansion.
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Dramatic jump in monthly repayment in less than a year (Photo: ShutterStock)
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The interest rate in the economy
interest
Bank of Israel
Prime interest
