Real Estate (vecteezy Photography)
Only 3 months since the wave of interest rate hikes began and the first “pay the price” are mortgage takers. Since the average mortgage in Israel is a little less than NIS 1 million and since 40% of the average mortgage is linked to the prime, since then the Governor of the Bank of Israel has started raising the interest rate, the monthly payment has increased by NIS 200.
In principle, the Governor of the Bank of Israel, Prof. Amir Yaron, estimates that the Israeli economy will be able to cope with the interest rate hikes that aim at the end of the day, reduce the amount of free money available for consumption and direct it to savings.
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True, every person hurts in the pocket to pay 200 shekels every month more but the alternative is much worse. Without raising the interest rate and paying the price attached to it, we will see inflation continue to rise and the immediate meaning is an increase in the monthly expenditure to maintain the same consumption basket or standard of living. Therefore, the Bank of Israel (and the central banks around the world) are willing to pay this price over rising inflation, which is a sharp rise in prices.
Recall that in the near future electricity prices are expected to rise, the prices of milk under supervision, water prices and more priest and priestess and therefore the need arises to stop inflation by raising interest rates – the immediate meaning? Is as stated the increase in current mortgage payments.
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