Member of the Knesset Yanon Azoulai (Photo: Knesset Spokesperson, Noam Moshkowitz)
Her mortgage payments just keep going up
, her mortgage repayment period is jumping, and worse - an increase of a year and a half in the extension of mortgages.
This is according to a study conducted at the Knesset's Research and Information Center.
The study was written following a request by MK
Yanon Azoulai from the Shas party
, and concerned data on the change in the owner-occupied apartment price index, since the housing market behaves cyclically due to changes in demand factors (such as demographics and the interest rate that affects apartment buyers), which encounter a rigid supply.
According to the graph: Since May 2022, the increase in interest rates on mortgages began, which led to an increase in the number of months of supply (Photo: Knesset Spokesperson, Knesset Information and Research Office)
It can be seen that in the years 1993 to 2022 the price index of owned apartments increased at a real average annual rate of 3.3%.
Also, between the months of January 2020 and August 2022, the index jumped by a sharp rate of 32.1%.
This sharp increase was due both to an increase in the construction input index during this period, and to an increase in demand, which may occur for a variety of reasons, among them the 'falling off the fence' of many participants in the lotteries of the "Residential Price" and similar programs due to a long wait, and the purchase of a privately owned apartment, a change in the regulation on The mortgages that made it possible to increase the weight of the prime route from one-third to two-thirds, and more.
However, in recent months, the Bank of Israel has begun to raise the interest rate in the economy, which of course led to an increase in the interest rate on mortgages, especially in the non-linked variable interest rate track (prime).
It can be seen that since the middle of 2022, the increase in interest rates on mortgages began, which naturally led to a decrease in demand, and consequently to an increase in the number of months of supply (see the attached photo above)
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According to the study, the increase in interest rates in recent months may lead to the following:
A decrease in demand for the purchase of an apartment on the one hand and an increase in demand for rented apartments on the other hand.
It should be noted that at the same time there was a jump in immigration to Israel from the countries of Ukraine and Russia following the war, which also increased the demand for rented apartments.
A decrease in the demand of apartment buyers in favor of investment - leading to a decrease in the supply of rented apartments.
Increasing the mortgage payments of many households and reducing the ability to purchase a first apartment.
The rent index is based on a sample of about 17 thousand observations, representing three groups of tenants:
A group of tenants who are under a contract in which the rent remains unchanged or is pegged according to a linkage mechanism (such as the consumer price index).
The average weight of this group in the months of May-October 2022 is about 87%.
A group of tenants renewing a contract that ended in the same apartment.
The average weight of this group in the months of May-October 2022 is about 10%.
A group of new tenants in a new apartment.
The average weight of this group in the months of May-October 2022 is about 3%.
The change in the rent index and its various components (Photo: Knesset Spokesperson, Knesset Research and Information Center)
Beginning in May 2022, the CBS began to publish the change in the components of the three groups. There is almost no change in the group of tenants who are under a contract.
In the attached image above you can see the change in the rent index and its various components (a group of tenants renewing a contract that ended in the same apartment, and a group of new tenants in the apartment It
can be seen that the total rent index increased in the months of April to October 2022 by approximately 3.1% (average monthly rate of 0.5%), the index of the group of tenants renewing an expired contract increased in recent months between 1% and 3.7%, and the index of the group of new tenants rose in recent months between 5% and 8%.
Real estate
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Real estate I
Israeli Knesset