The Supervisor of Banks Yair Avidan presented today (Sunday) in the Economics Committee the details of the planned mortgage reform, and said that a uniform and comparable mortgage basket is currently being formed that will begin operating in the first half of 2022.
According to the chairman of the committee, MK Michael Bitton (Blue and white) “Last week we were informed about a reform in the mortgage market, an issue we have been following for a long time. Today the situation is terrible, there is no method, no competition and no simplicity. It turned out that 54% of mortgage borrowers did not ask for a second offer There are no equal indices between the mortgages. ” MK Bitton added that “canceling the ‘price per occupant’ program is a blow to the weak.” Bitton demanded that in four months the Bank of Israel present to the committee the progress of implementing the reform.
Yair AvidanThe Supervisor of Banks replied that “We invest years in supervising this market, both for the benefit of the manufacturer and for the sake of stability. In demand for real estate, and recorded an increase in housing prices. “75% of mortgages are at a lower risk level than is customary in the world, and we are quite in the conservative area.”
Avidan promised that a customer will receive a uniform comparison in each bank, when a uniform and clear and simple mortgage basket will be formulated, and each bank will provide with the approval in principle three uniform mortgage baskets, the composition of which is determined by the Bank of Israel. Unindexed fixed, second basket – one third of fixed and unlinked loan, one third linked to prime, and one third changes every 5 years linked on the basis of government bonds. Adjusted to the customer’s request and will vary between the banks.
To the question of the chairman of the Economics Committee, the Supervisor undertook that “in the coming year we will complete the regulation – and our ambition is that it will begin on Friday, July 1, 2022.”
More Michal CohenThe Acting Commissioner emphasized the concentration of the market and the low level of competition: “When the main players are exclusively banks, and three banks hold about 85% of the mortgage market and fight less between them, no new players enter – and in any case no competitive equilibrium can be reached. In addition, transparency is low, there is a real difficulty in comparing prices and long waiting times have been recorded for an offer. “
According to her, a study by the Competition Authority showed that customers make limited use of the right to receive “approval in principle”, and only 44% received more than one offer. In the current situation – a customer who competes before taking out a mortgage – may reduce the price of the mortgage by tens of thousands of shekels during the life of the loan. Cohen noted that if the customer could fully compare the various loans, then pricing could lead to savings 3-2 times greater than the savings in pricing in the current situation.
MK Shlomo Krai (Likud) noted the banks’ demand for a mortgage on better terms – to transfer activity to the account: “The Supervisor of Banks in the right place – and the goal of all of us to allow a young couple to take a decent and transparent mortgage. Gives a benefit to the customer and the banks try their best to prevent this benefit. “In addition, he called for the early repayment fee to be completely abolished.
MK Osama Saadi (The joint list) validated and said that there is “a lack of reference in the Bank of Israel program to Arab citizens, when only 2% of them receive a mortgage, bank branches in the sector localities are closed and there is no regulation of land ownership registration.”
MK Uri Maklev (Torah Judaism) noted the difficulties of the ultra-Orthodox society in taking out mortgages, such as low income and difficulty in obtaining Arabs.
Noam David Butosh, A researcher at the Knesset’s Information and Research Center, added the information gaps between the banks, and the need to examine the integration of mortgage advisers in the reform initiated by the Bank of Israel, and the ability to turn mortgages into bonds – as a move that would add competition.
According to Ethan Madmon, CEO of the Association of Banks, there is already competition in the market, including a significant drop in interest rates – and this has been determined in the past in a number of professional reports. This is the most open market for competition and falling prices, the indices set by the Competition Authority are extremely stringent, and over 80% of customers receive offers from several banks.