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Deferring loan payments could deepen crisis: "It's a risk, not a gift"
The Supervisor of Banks has approved extending loan and mortgage repayments to help address the consequences of the closure and declining revenues.
However, a senior official at the Bank of Israel emphasizes that "the rejection is not a grant, it is an option to deal with only a serious difficulty."
Family economics adviser warned: "Citizens could be harmed"
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Mortgages
Corona virus
Bank of Israel
Dana Yarkatzi
Tuesday, 29 September 2020, 21:51
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In the video: Statement by Finance Minister Katz (Photo: GPO)
Deferring loan payments extended today (Tuesday) by the Bank of Israel's Banking Supervision Unit may benefit bank customers, but at the same time, without a proper calculation of the benefit of deferral, it could hurt many households and businesses.
Tal Harel Matityahu, chief of staff of the Supervisor of Banks, explained in a conversation with Walla!
NEWS that the decision "will help deal with the financial difficulty, but it is a loan that needs to be repaid, like a new loan that you repay later in the period, and that has consequences."
Harel Matityahu warned: "A customer who chooses to use this right should check the financial cost, because there is an extra that he has to pay. Mortgages are a six-month automatic deferral plus three months until the end of the year. A customer can reach a total of nine months Still, a new customer can take advantage of this six months from now. "
She explained the outline and said the move is not a grant.
"So we took three types of credit. In mortgages, the loan is unlimited in amount, in consumer credit, the loan is up to NIS 100,000, and in business credit, the business is subject to an annual turnover of NIS 25 million, which was affected by the crisis. Opinion, deferring peace is not a grant or a gift, and it does come at a cost, but it makes it possible to deal with an immediate cash flow difficulty, ”she said.
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"Allows for immediate cash flow difficulty."
The Bilu complex is sparsely populated during the Corona (Photo: Yossi Aloni, Flash 90)
Elazar Pinkovich, director of the Central and Southern District of the Bells organization, a non-profit organization that deals with the training of knowledge for proper economic management for Israeli households, said in a conversation with Walla!
NEWS that in hindsight, the Bank of Israel should have allowed the deferral of loans.
But in hindsight, he warns households seeking to defer loans without making a calculation as to the benefit of that deferral of and to what extent it may harm that household later on.
"The regulator is right, the Bank of Israel is doing the right thing by asking the banks for more time so that households do not collapse due to non-compliance with the obligations. The danger here is that we see the same move happening for the third time,
"This means that there are households that have frozen without the need for both mortgages and consumer credit. 12% of some people were quick to accept the bank's advice to freeze when they were not financially required to do so or could find other solutions," he said.
"Possibility to deal with serious difficulty."
Tal Harel Matityahu (Photo: Bank of Israel Spokeswoman)
The Banking Supervision Unit of the Bank of Israel has extended the deferral of loan payments, for the third time since the outbreak of the corona.
The decision is valid in three business segments: mortgages, consumer credit and business credit.
This is an extension of the outline that was formulated last May, and was adopted by the banking system.
The extension will last until December, when new customers who request a postponement will receive a six-month extension.
According to data from the Bank of Israel, from March to mid-September 2020, the banks deferred loans to approximately 738,000 customers in all operating segments, in a cumulative amount of approximately NIS 9.5 billion.
In the days when it was amended, the mortgage deferral was 3% of all consumers, and today it is 12% of the mortgage volume.
The Bank of Israel estimates that the percentage of mortgages or loans that are in deferral is similar or parallel to the percentage of unemployment.
The decision on a third extension follows a decision by the Israeli government to impose another closure in an attempt to combat the spread of the epidemic, with the understanding that customers must be helped to deal with the economic consequences of the restrictions.
These include, among other things, a decrease in income, damage to employment and difficulty in repaying loans.
The period for submitting the application for deferral of loan payments will be extended until the end of the year.
That is, until December 31, 2020, and the decision includes all types of loans.
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