The new interest rate of the Bank of Israel will take effect tomorrow, following which the mortgage will increase in price.
Meaning: higher monthly payment, depending on the size of the loan and the mix of different routes in it.
For an average mortgage, of which NIS 400,000 is in the prime track (the interest rate in the economy + 1.5%), an increase in the interest rate by 0.25% will increase the repayment by NIS 45 per month.
If the interest rate rises in line with expectations of 1.5% within a year, the monthly repayment will increase to NIS 270 for an average mortgage, which is NIS 3,240 per year.
Bank of Israel regulations require borrowers to set a fixed interest rate on at least one-third of the mortgage.
With the price increase of the prime route becoming much more expensive, it is necessary to convert it to a fixed non-index-linked interest rate (CPC) route, but there are those who are convinced that it is not worthwhile to part so quickly from the prime route, which will probably remain the cheapest.
Interest rates tracks: comparison,
"In my opinion, the mortgage rate at prime interest rates will increase," says Yoni Berliner, chairman of the professional committee at the Association of Mortgage Advisers.
"Until six months ago, we were debating between a prime interest rate and an unlinked fixed rate. Even when the Bank of Israel's interest rate rises to 1.5%, the dilemma will be against an unlinked fixed rate, which is more than 4%, so the prime route is cheaper."
"Know - and prepare."
Berliner, Photo: Amanda Surudi
Berliner points out another advantage of the prime track: the possibility of early repayment without commissions, which amount to tens of thousands of shekels in the KLT interest rate track. Both because it is linked to the rising index and also because it is affected by the Bank of Israel's interest rate.
In general, Berliner recommends having interest rate exposure rather than index exposure.
"Anyone who has a prime component in the mortgage mix should not replace it - but he needs to know how much his monthly repayment will cost, and he should be prepared for that."
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