Almost a week has passed since the Bank of Israel raised the interest rate by three quarters of a percent to 2.75%.
This is the fifth consecutive increase in the interest rate, and it brings it to a level that prevailed only in 2012. According to the central bank's forecast, the interest rate is expected to continue to rise and stand at an average of 3.5% in the third quarter of 2023.
According to estimates, inflation this year will be 4.6% and in 2023 it will drop to around 2.5%.
We will remember that only a few months ago the interest rate was 0.1%.
What is the expected impact of these measures and forecasts on households?
One significant effect is the increase in the cost of loans.
Thus, for example, those who took out a mortgage of 1.2 million shekels for 25 years, half of which is linked to the prime interest rate - their monthly repayment will increase by about 250 shekels, i.e. an additional repayment of 3,000 shekels per year.
On top of that, the refund is expected to increase in the adjacent part as well.
Another expense that is expected to grow is the interest on the rest of the household loans in Israel.
Of this, the withdrawal of the permit should be noted.
Recent data shows that about a third of households are in a permanent deficit.
This is the most expensive credit.
But the other loans are also expected to become more expensive.
Another type of loans that is proposed to be examined as well are those used for investments in the capital markets, which have recently undergone upheavals.
Hence, the increase in interest rates sharpens the need to examine the household's loan portfolio and make the required changes.
The investment side should be checked both in light of the increase in interest rates and due to the changes that have taken place in the world's economies recently, as a result of the increase in inflation and the political instability in various parts of the world.
Examining the family investment portfolio should include a combined examination of financial and pension assets, looking at the results and making a family decision if the level of risk and diversification in these assets matches the combined expectations and tastes of the household members.
An important issue that unites the financial conduct is the management of the family budget.
were we wrong
We will fix it!
If you found an error in the article, we would appreciate it if you shared it with us
