In December 2022, the Israeli public took out mortgages amounting to NIS 7.56 billion, according to Bank of Israel data. But the interesting question is how to compare the data – compared to the month of November, that is, the previous month, we are talking about stability, even then the public took out mortgages amounting to NIS 7.56 billion. That is, it is possible that this is a slowing down of the decline that has occurred in the last six months in taking new mortgages. In addition – this is a 38% drop compared to December last year, but in December last year the public took out mortgages amounting to NIS 12.2 billion, a very high amount compared to the average, so the question is whether it is only a ‘return to normality’ or a drop beyond that.
On the other hand – the month of December is considered a strong month in the real estate market, the end of the year and people tend to close deals. The contractors also want to close deals and therefore traditionally the volume of mortgages is higher in December. Therefore, when now the volume of mortgages is the same as the month of November – and not significantly higher – it is possible Because this is about the continuation of the trend of containment.
In short, the figure that is published now is interesting no matter how you look at it, and the question is what will be the trend in the coming months. Today the Chief Economist at the Treasury published additional data on the market. Although they are true for the month of November, they show the first signs of a drop in prices in the market. According to the data, this is a 57% decrease in the purchase of apartments in November. Investors also bought less – 80% compared to last year. One of the reasons: last November there was a wave of purchases before the increase in the purchase tax, but even after neutralizing this figure it is a 42% decrease (for the full data)
The Bank of Israel interest rate increased again at the beginning of January, so that it now stands at 3.75% and the prime rate at 5.25%. This means an additional increase in the mortgage repayments of the general public. Since the beginning of the wave of interest rate increases in the past year, the monthly repayments to the public have become more expensive by NIS 1,000-1,500 per month. How much did your mortgage repayment cost? Click here for the calculator
What is the interest rate on the mortgage?
At the same time, the Bank of Israel published the average interest rate on mortgages. The shekel interest rate was 4.79% on average in the previous month, similar to the interest rate in November. However, this interest rate does not embody the interest rate increase in the economy that was carried out as mentioned on January 2nd and the question is how this interest rate increase will be reflected. On the other hand, it should be said that the interest rate rose earlier also on November 21st so that it is still possible to compare the interest rates in the two months of November and December – and these were similar interest rates. That is, in relation to these two months, the increase in the public’s interest rate stopped, at least temporarily.
The average interest rate in the long-term routes (for more than 25 years) was 4.98%, but the interest rate in the variable interest routes increased in December to 5.65% (compared to 5.51% in November). Let’s recall that a year ago the average interest rate on mortgages was only 2.2%, meaning a 130% jump in the interest rate.
The data on the change in housing prices in Israel: this coming Sunday
This coming Sunday, at 18:30, the consumer price index will be published, along with the change in housing prices. Will the significant slowdown seen in the market in apartment purchases and mortgages also lead to a decrease in housing prices? In the previous months it did not happen (although in the world it is already happening) but the market believes that it is coming. Various experts are already pointing to a de facto halt in the rise in housing prices, and the question is whether the declines will also come.
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