The Monetary Committee of the Bank of Israel, chaired by the Governor of the Bank of Israel, Prof. Amir Yaron, decided to raise the interest rate in the economy by another quarter of a percent to a rate of 4.5%.
The prime interest rate will rise to 6%.
Thus, the Bank of Israel's interest rate that will come into effect in the coming week will be the highest since December 2006.
The main public that may be affected by the bank's decision are the mortgage holders, when the monthly loan repayment will rise again, after it has already increased by hundreds of shekels in recent months.
The interest rate increase directly and severely also affects the execution and infrastructure contractors and their ability to meet the conditions required of them, in accordance with the mandatory payment ethics.
Sargo: Dramatic deepening of the housing crisis
"The decision to raise the interest rate is a dramatic deepening of the housing crisis," exclaims the president of the Boni Ha'aretz Contractors Association, Raul Sargo.
"The decision puts aside for many young couples the dream of an apartment and their financial well-being, causes a halt to new construction and a rise in rental prices. In doing so, the Bank of Israel causes the supply to decrease and the housing crisis to worsen."
Sargo continues and says, "It is not clear how the continued increase in interest rates can mitigate increases in the price index when a quarter of it is affected by rental prices and reacts strongly and quickly in the opposite direction. We are experiencing a dramatic 25% decrease in construction starts since the interest rate increases. Despite the consequences of the interest rate increase on the housing crisis, the government Does not make decisions, and does not bring true solutions for the future of the young people in the State of Israel."
Referring to the effect of the interest rate increase on construction and infrastructure contractors, Sargo said: "Delay, postponement and cancellation of infrastructure projects lead to direct damage to the state's economy and the quality of life of its citizens. Just this week we saw the data on the number of construction companies that are at risk of collapse, construction contractors are having difficulty bridging the growing gap and increases between their costs and the payment dates customary in the industry, and the burden of mortgages and rents is increasingly burdening young families all over the country. The Bank of Israel must take these consequences into account in its considerations for raising interest rates, and the Israeli government must take action to continue the continuity of residential construction and the establishment of infrastructure before it is too late."
Real estate
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interest
mortgage
Bank of Israel
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