Mortgage risk rises – Globes

Move-up buyers and young couples that have not bought apartments under the government’s Buyer Price subsidized home purchase scheme (now discontinued) have again broken the record for mortgage loans taken. Analysis by the Bank of Israel shows that the average mortgage loan taken in these categories last month was NIS 1,049 million. The average loan taken by investment buyers was NIS 891,000. The general average for mortgage loans was nearly NIS 1 million.

Mortgage loans taken in April totaled NIS 10.5 billion, one of the lowest figures in recent months. The number of borrowers was also relatively low, totaling 10,600. It should be remembered, though, that the Passover holiday fell in April, and also interest rates were raised. Considering these factors, the monthly total of mortgage loans remained high in April.

Examination of the loan-to-value and payment-to-income ratios shows that these two metrics, which indicate the degree of risk in mortgage loans, are at peak levels. 47% of the mortgage loans taken in April amount to 60% or more of price of the home being purchased. This is the highest level for at least a decade. Since the end of last year, this proportion has ranged between 45% and 47%, reaching its peak in April, as mentioned.

In the case of 41% of the mortgages taken, the monthly repayment exceeds 30% of household income. This too is a peak figure. In April 2019, April 2020, and April 2021, this proportion was 34%, but the stable trend was broken in the second half of last year, when the number of borrowers with high monthly repayments in relation to income started to rise.

Published by Globes, Israel business news – – on May 29, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

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