The rate of risky mortgages jumped within a year to 45% of total housing loans

31/10/2022 à 9h57 da GLOBES

In the shadow of rising interest rates and inflation: the Bank of Israel reveals a record in the rate of mortgages where the monthly repayment exceeds 30% of disposable income.

Despite the jump in risk, the banks trust the morality of paying the Israeli debt, which has been in its best period for 15 years • A mortgage consultant warns: "When the Bank of Israel intervenes it will be too late"

With an annual increase of 19%, housing prices have become one of the deepest crises facing the next government. Data published by the Bank of Israel in recent days reveal how fundamental the need for immediate treatment of the housing market in Israel is, and why it is better to do it now, before dealing with new mortgage borrowers becomes a need to help mortgage borrowers who cannot meet monthly repayments.

According to the data, although the volume of mortgages decreased in September by 21% to NIS 7.7 billion, the proportion of mortgages in which the monthly repayment exceeds 30% of the borrowers' disposable income jumped within one year from 34.9% (in October 2021) to approximately 45.2% Last September, breaking an all-time record. This means that the public of apartment buyers, especially young couples, is ready to take much bigger risks than before.

"Already today there are those who are not meeting their repayments"
"There are those who buy an apartment and take a mortgage that is too large, much larger than they can afford, and choke to the brim," says Oren Shalu, a member of the Association of Mortgage Consultants. "In a few months, when the Bank of Israel raises the interest rates again, it is possible that those people will collapse financially and the day will probably not be far when people will fall. Already today we are receiving calls from customers who are unable to meet their repayments. These are customers who, for example, took out their mortgage with a repayment of NIS 6,000 and after the interest rate increase (bank interest Israel jumped from 0.1% to 2.75% in six months, and 1.5% must be added to that to reach the prime interest rate, (f) their repayment is 7,000 or 7,300 shekels, and it kills them."

Shalev explains that the risk does not remain only around the monthly mortgage repayment. "In the end, her mortgage often ends up with additional loans. Many get into difficulty with their mortgage payments, take out more and more loans, with each loan increasing the gap between income and expenses. Thus, they create a situation where this wheel of loans will lead to their collapse."