The mortgage market is bubbling: According to Bank Leumi estimates, NIS 10.5 billion in mortgages were taken out during June – compared with NIS 9.47 billion in May, which is considered a record month, and NIS 3.94 billion in June 2020.
In the first half of 2021, NIS 53 billion in mortgages were taken out – a 35% jump compared to the first half of 2020. Taking out loans mainly indicates the cost of living in the housing market and the continuing rise in prices.
Uri Yonisi, VP of Customer Relations and Mortgages at Bank Leumi, attributes the situation to a number of factors. .
The second phenomenon is related to the continued rise in housing prices, at a rate of more than 5% per year. Young couples who have not signed up for a price-per-tenant program are now in a hurry to return to the market to make a deal. The public expects prices to continue to rise, and this is certainly an issue that needs to be addressed.
The third component depends on the demand coming from housing investors, who have joined the market significantly, thanks to a reduction in purchase tax. 20% of the mortgages are taken by the investors (the Treasury is considering the possibility of returning the purchase tax on another apartment as it was in the past – to increase it from 5% to 8%).
The last factor is foreign residents, some of whom are returning to Israel. These are people who have been harmed by the corona effect in the world, and for them Israel is considered a safe haven. This public is looking for expensive and spacious apartments in the big cities.
According to estimates by Bank Leumi, the housing market lacks 120,000 housing units. “In my humble opinion, an emergency plan must be put in place that centers on closing gaps within five years and releasing land at low prices. Contractors must be made to carry out strenuous construction and flood the country with supply,” says Unice.
In the current situation, Leumi is anticipating continued price increases, and is preparing in accordance with the situation while adding dozens of employees in the mortgage systems, direct banking and branches. Representations have also been opened, enhancing the digital space.
“Despite everything, we did not anticipate such a wave of mortgage demand coming. We were prepared for a 5% -10% increase, but not a 50% jump. No one expected us to reach such dimensions,” Eunice added.
Source: Maariv.co.il – כלכלה בארץ by www.maariv.co.il.
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