Psagot (photo by Alexander Katz edited by Ace)
For the first time, a major investment house in the local economic life talks about the “elephant in the room” and conveys a message to its clients: the pressure on the contractors is great, the macro-economist Psagot writes to the clients giving a note, and it will only increase as the interest rate rises and the payments on the mortgages rise. This is for Psagot’s assessment, a precursor to a price drop already in the coming year.
“The mortgage data continue to testify to the cooling of the demand side in the housing market along with an increase in risks, when in October the number of mortgages (“performance”) stood at 5,811, the lowest figure since September 2018. Usually at the beginning of the month we receive data on the average interest rates in the market and the scope of mortgages, which in the month of October amounted to about NIS 6 billion compared to about 7.7 billion in the previous month. Part of the decrease is due to the Tishrei holidays, but not only, as this is a trend against the background of the ever-increasing increase in interest rates.
More in-
“Additional (disturbing) findings from the latest published reports: the average mortgage jumped to an all-time high of more than NIS 1 million (the previous record was last July 1.042 million), and the average monthly repayment jumped from NIS 5,121 to NIS 5,703, and this is even before the increase The last interest rate from 2.75% to 3.25%. To explain the ear, the average monthly repayment before Corona was about 3.5 thousand, a jump of about 60%.
“In accordance with the jump in the average monthly repayment, the performance weight according to the high repayment ratio (30-40%) continues to climb when in October it rose from 44.9% to 46.4%, an all-time high, which by the way indicates that the increase in the average salary in the economy does not compensate for The rising cost of mortgages.
“The number of mortgages taken out with the highest percentage of financing between 60% and 75% out of the total number of mortgages (or in other words the performance with the highest percentage of financing out of all the performances) reached an all-time high in the data series and stands at 46.4%, while on the eve of the Corona crisis the number was about -38.5%
“The number of mortgages taken out for investment apartments was 645, the lowest figure since 2011. Of course, the number of mortgages for investment apartments has been on a downward trend since the beginning of the year against the background of the purchase tax that returned to 8% and the financing costs that are climbing, and also, after a decade there is no alternative Risk” they write at the summits to their customers.
“Looking ahead” they say “mortgage payments are expected to continue to become more expensive as the Bank of Israel is expected to continue raising interest rates in the upcoming decision to be held in January to a level of 3.50%-3.75%, but the good news for mortgage holders is that the cycle of interest rate increases is expected to reach exhaustion at this level.
“As far as housing prices are concerned, the mortgage data is added to a long line of data that indicates a cooling on the demand side, and all this alongside a supply that has been increasing significantly over the past year. The longer the weakness in demand continues, the more the pressure on the contractors’ cash flow will increase. In the meantime, it seems that they are still enjoying from the surpluses of recent years, but all of this may change over the coming year. We estimate that housing prices will begin to decline with a view to 2023,” they conclude this significant analysis.
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