In about two and a half months, the banks’ obligation to offer three fixed mortgage routes will take effect so that mortgage borrowers can compare more easily. Today (Monday), the Bank of Israel published a new draft that will further increase the power of borrowers, and at a time when interest rates are rising, there is also one clause that can lower loans for some savers.
During the banks’ work on the new regulations regarding the new tracks, which were first published in Globes, questions arose regarding, among other things, how to incorporate “directed loans”, known as “eligible loans”, which allow some borrowers to take out a mortgage at a reduced interest rate and for long periods. Always present to eligible customers.
“In light of the importance of providing information to customers regarding direct loans, it has been determined that banking corporations will publish references to relevant parties, as part of the online information they are required to publish to the public. , Explained in the Supervisor of Banks.
It should be noted that as early as 2017, the Supervisor of Banks informed the banks that the inclusion of a directed loan in the loan mix will not lead to a change in interest rates. In order to illustrate the importance of the directed loan, the Bank of Israel presented a numerical example of how to integrate an eligibility loan after receiving approval in principle.
A customer who applied for a loan of NIS 700,000 and received approval in principle, is interested in a uniform basket 3, according to which half of her mortgage will have an unlinked fixed interest rate and half will have an interest rate linked to the prime interest rate. The interest rates he received in this basket – NIS 350,000 at an interest rate of 4.5% in an unlinked fixed track and NIS 350,000 at an interest rate of Prime + 0.5% at a variable variable track.
At the customer’s request to combine an eligibility loan of NIS 100,000, the proposed basket will be updated as follows:
NIS 100,000 – an eligibility loan in a linked permanent track.
NIS 300,000 at an interest rate of 4.5% on an unlinked fixed track.
NIS 300,000 at prime interest + 0.5% in the prime variable track.
“The eligibility loan is given by the state but is transferred to the public through the banks. This way the bank can prioritize that the borrower does not take the eligibility loan but takes the money from the bank itself and this creates difficulties in the process,” says Jonathan Berliner, chairman of the professional committee. “The Bank of Israel decided to put an end to this customer and determined in the procedure how an eligibility loan will be given in such a way that the banks will not be able to raise interest rates for customers who want to use the eligibility loan.
In addition to the issue of eligible loans, the new draft includes an update to the requirement for banks to display in the online calculator the first monthly repayment amount, the highest monthly repayment amount expected according to the forecast and the total expected amount to be paid by the end of the loan period. Also added was the requirement to present the “projected total interest rate” in the various mixes.
“The online calculator is designed to allow the customer to perform simulations and estimate the costs he will have to meet in the future. In order to ensure that the calculator provides the customer with sufficient information, the data required by the banking corporation “In the framework of the information provided to it in order to examine the feasibility of early repayment, the ‘projected total interest rate’ and the ‘interest rate for comparison purposes’ must also be presented for the entire loan,” the Supervisor of Banks explained.
A number of additional amendments were also set out in the draft, which were intended to improve the mortgage cycle process. Central to this is the obligation for banks to allow customers to submit a digital letter of intent form so that they do not have to run between the original bank where the mortgage was taken and the new bank where the turnover was made. The period of time required to obtain forms manually may be critical in these days when interest rates are rising, with interest rates offered by banks being limited in time that is not always enough for customers to carry out a real competitive procedure between banks.
“Customers who wanted to refinance their mortgage and move from one bank to another had to go through a terrible bureaucracy that includes submitting a physical application at the branch, after three days to come again to take the letter of intent and go with it to the other bank just to carry out the cycle. ” Said Berliner.