Title: Economic Committee Urges Bank of Israel to Address Soaring Mortgage Payments
Subtitle: Committee proposes measures to alleviate the burden on homeowners amidst a surge in interest rates
Date: [Current Date]
In a recent meeting of the Economic Committee held at the Knesset, Chairman David Bitan called upon the Bank of Israel to take immediate action in response to the growing mortgage payments resulting from increased interest rates. The discussion took place following the Bank’s announcement that interest rates would remain high for the foreseeable future.
Attorney Shlomo Ness, who led the ‘Forum to Save the Economy’ during the Corona crisis, presented an outline to the committee. It aimed to create avenues for reducing mortgage payments and was the focal point of the meeting. Ness, whose office assists thousands of debtors in Israel, revealed that households have experienced a significant rise in mortgage expenses, ranging from NIS 1,000 to NIS 1,200 per month. Consequently, mortgage costs now account for nearly 40% of monthly household income.
While the Bank of Israel provided more moderate figures, citing an increase of approximately NIS 800 in mortgage expenses since the start of 2022, Ness emphasized the need for immediate intervention. During the pandemic-related closures, he advocated for freezing debt repayment, including mortgage payments, until the economy recovers. Time has proven him right, as increasing numbers of borrowers seek assistance from banks to modify their mortgage terms and lower their repayment amounts.
Ness called for three proposed actions that the Bank of Israel could implement promptly to address the crisis. Firstly, spreading existing mortgages over 30 years would reduce current payments. Secondly, allowing customers and banks to agree on temporarily halting part of the interest payments would provide relief. Finally, transferring payments solely to cover the interest accrued over the past year and a half, to be repaid at the end of the mortgage term, was suggested.
Ness highlighted the urgency of the situation during the committee meeting, comparing it to the gravity of the Corona crisis. He shared that senior officials from major banks confirmed they were inundated by customer inquiries requesting changes to their mortgages. However, the banks were either hesitant or barred from advancing these requests, either due to reluctance or prohibitions enforced by the Bank of Israel.
Despite Chairman Bitan’s assertion that the Bank of Israel had agreed, in principle, to implement several alleviating measures, representatives from the Bank sounded skeptical about Ness’s proposals. Dr. Ziv Noor from the bank supervision unit at the Bank of Israel pointed out that there had been no noticeable increase in payment arrears. He assured the committee that banks were already assisting customers facing financial difficulties.
Governor Amir Yaron of the Bank of Israel spoke against governmental interventions and legislative attempts to meddle in the situation. Yaron argued that, in the long run, high expenses would balance out with a decrease in inflation. Dr. Yossi Saadon, director of the financial department in the Bank’s research division, echoed this sentiment, stating that extending mortgage terms or postponing payments would inevitably burden customers, while benefiting the banks in the long term.
As the burden of mounting mortgage payments weighs heavily on Israeli households, the Economic Committee’s call for urgent action from the Bank of Israel underscores the need for immediate relief measures. The fate of thousands of debtors hangs in the balance as discussions continue on the best course of action to alleviate their financial strain.