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The total of new home loans taken in Israel fell sharply in April. Mortgage lending totaled NIS 10.5 billion last month, 22% less than in the peak month of March, according to Bank of Israel figures released today. The assessment is that the decline stems from the fact that home buyers rushed to take out mortgage loans in March to beat the interest hike that the Bank of Israel announced last month.
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April was one of the weakest months for mortgage lending since June 2021. Only during the Jewish holiday season, which fell in September last year, was mortgage taking lower than in April. Nevertheless, the total for April was unusually high considering that the Passover holiday fell in that month.
The Bank of Israel does not give a breakdown of mortgage borrowers, but figures from the chief economist in the Ministry of Finance indicate that investment buyers have very much reduced their presence in the market, and that investment purchases are back to the level they were at between June 2015 and July 2020, when purchase tax for investors was at the level introduced by then minister of finance Moshe Kahlon. Kahlon’s successor, Israel Katz, subsequently reduced the tax rate, and investors returned to the market, but in November last year the current minister, Avigdor Liberman, hiked the rate for investment purchases again.
According to the chief economist, the most active buyers in the past few months have been young couples, who stepped up their purchases, probably in anticipation of an interest rate rise. Even after the interest rate hike, they presumably remained very active, leading to a relatively high total for mortgage loans in April.
Published by Globes, Israel business news – en.globes.co.il – on May 15, 2022.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.
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