On August 22, Governor Yaron is expected to raise the interest rate on the shekel once more.
In the interest rate market, there are differences regarding the amount of the increase, and if until recently most economists believed that the interest rate would increase by half a percent, today, about half of the economists believe that the governor will settle for a quarter percent increase.
Either way, the interest rate will rise to a level between 1.50-1.75% - its highest level in nine years, and according to the forecast of the research division of the Bank of Israel, the monetary interest rate is expected to stand at 2.75% in the second quarter of 2023.
We will recall that only four months ago the interest rate in the economy was almost zero, at the level of 0.1%, and the accelerated process will make the mortgage repayments of households more expensive by hundreds of shekels per month, and by tens of thousands of shekels over the life of the mortgage.
Simple steps to save a lot of money, photo: Reuters
Since the expectation is that interest rates will continue to rise, it is important to prepare for this in advance.
For those who already have a mortgage - check how much more the monthly repayment is expected to cost and for those who are going to take out a mortgage in the coming days, you should know four useful tips that we prepared together with the Association of Mortgage Consultants.
Discount on case opening fees
On August 23, the law will enter into force that limits the fee for opening a mortgage portfolio in banks to only 360 shekels (instead of about 2,500 shekels for an average mortgage as of today).
According to the law, the reduction will only apply to mortgages submitted from this day on, so those who apply and plan to take out the mortgage only in two months can wait until August 23rd to apply and save an average of NIS 2,150, and those who apply before then are advised to ask the bank for advance approval for a fee reduction.
We note that in light of the Bank Relations Committee's appeal to the banks on the subject, among the major banks - only Bank Hapoalim, and also the Bank of Jerusalem - we have been informed that they have already advanced the reduction to all their customers, and therefore in these banks there is no need to wait when submitting the application.
Bargain
In light of the decrease in demand in the recent period, the possibility of conducting effective negotiations between the banks has increased. Unlike the pressure that existed in the last year and a half, today it is possible and appropriate to fully exhaust the negotiations between the banks.
The prime route?
For more than a decade, the prime route was considered the cheapest and most profitable route, so even today it continues to be taken as a high component in most mortgages.
It should be noted that as of today, in most banks, the prime route is priced expensively in relation to the market.
In addition, the Bank of Israel interest rate is expected to rise again at the end of the month, so a higher monthly repayment than that listed in the approval in principle must be taken into account.
Therefore, it is worth consulting on the recommended percentage of use in this route.
Opening a current account
Due to the increase in the prime interest rate, there is a need for banks to raise new current account deposits, therefore most mortgage banks offer improved mortgage terms to customers who transfer the current account activity close to taking out the mortgage.
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