The Supervisor of Banks has approved an extension and further expansion of the comprehensive outline for deferring payments on bank loans. On May 7, 2020, the Supervisor formulated an outline, adopted by the banking system, that allows customers to defer loan payments in three operating segments: mortgages, consumer credit and business credit. The goal is to continue to assist customers in dealing with the cash flow difficulties following the consequences of the crisis, while managing risk wisely and responsibly, the Supervisor of Banks announced on 13.7.2020 the extension and expansion of the outline and now it announces another expansion that will take effect from 1.10.
The period for submitting the application for deferral of loan payments will be extended until the end of the year, ie, until 31.12.2020. The extension of the period includes all types of loans: mortgages, consumer credit and credit for businesses
Consumer loans up to NIS 100,000: Customers who have postponed payments for a period of up to 6 months will be able to receive an additional deferral until 31.12.20 (and in fact reach a cumulative deferral of up to 9 months). Customers who have not yet declined payments and are now interested in deferring them will be able to receive a deferral of up to 6 months. The deferral without the bank's discretion is that of the principal component of the loan. A bank may also allow a deferral of interest in addition to the deferral of the principal
Mortgages and credit for businesses: will continue to apply as stated in the last outline published
The outline that is formulated presents the minimum conditions for deferring loan payments and any bank may (as is done in some banks) expand it for the benefit of its customers and at their request.
The Governor of the Bank of Israel, Prof. Amir Yaron: "Since the beginning of the crisis, we have been operating with methods and tools that have never been used to enable the proper operation of the economy and financial markets, along with a constant effort to advise government policy. Using tools provided by the Bank of Israel, it is another helpful tool for victims of the crisis, mortgage holders, and other borrowers who need this bridge to get through the difficult period. At the same time, it is important to emphasize that the coming months will allow banks and customers to start preparing for the day after the loan is deferred and to regulate the manner in which the loan is spread out as required. "
The Supervisor of Banks, Yair Avidan: "The additional extension of the outline is intended to give additional 'breathing space' to customers who have encountered additional difficulties as a result of the crisis and its aftermath. One - the relief for customers. I congratulate the banking system on its commitment to expanding and extending the outline for the benefit of their customers, in this complex period. The consequences of the deferral, including its economic price (interest rate, the amount of the monthly charge to charge after the deferral, etc.). It is recommended to implement this alternative only after examining its necessity and cost. It is important to note that deferral of payments will not be possible for an indefinite period, and therefore we must act resolutely in order to reach payment arrangements and repayment of debts, which match the customers' capabilities, taking into account the challenges of the period. "
Deferring loan payments extended today (Tuesday) by the Bank of Israel's Banking Supervision Unit will benefit bank customers, but at the same time, without a proper calculation of the benefit of the deferral, it could hurt many households and businesses. Tal Harel Matityahu, chief of staff of the Supervisor of Banks, explained that the decision "will help deal with the financial difficulty, but it is a loan that needs to be repaid, like a new loan that you repay later in the period, and this has consequences."
Harel Matityahu warned: "A customer who chooses to use this right should check the financial cost, because there is an extra that he has to pay. Mortgages are a six-month automatic deferral plus three months until the end of the year. A customer can reach a total of nine months and even those who did not use Still, a new customer can take advantage of this six months from now. "
She explained the outline and said the move is not a grant. "So we took three types of credit. In mortgages, the loan is unlimited, in consumer credit, up to NIS 100,000, and in business credit, up to an annual turnover of NIS 25 million, which was affected by the crisis. In mortgages and credit, the bank is obliged to defer payments without consideration. Opinion, deferring peace is not a grant or a gift, and it does come at a cost, but it makes it possible to deal with an immediate cash flow difficulty, ”she said.
A study by the Bank of Israel published today states that one in five households in Israel before the Corona, where two employees lived, was deducted from at least one employee. The Bank of Israel's study also showed that income from wages (and unemployment benefits) of families in which at least one member of the household was an employee before the crisis, and was registered as requiring work in July, his income decreased on average (and by calculation) by 20%.
According to data from the Bank of Israel, from March to mid-September 2020, the banks deferred loans to approximately 738,000 customers in all operating segments, in a cumulative amount of approximately NIS 9.5 billion. In the days when it was amended, the mortgage deferral was 3% of all consumers, and today it is 12% of the mortgage volume. The Bank of Israel estimates that the percentage of mortgages or loans that are in deferral is similar or parallel to the percentage of unemployment.
The period for submitting the application for deferral of loan payments will be extended until December 31, 2020, and the decision includes all types of loans.
Customers who defer payments to the fund for up to six months will be able to receive another deferral until the end of December. In fact, they could cumulatively reach a delay of up to nine months. Also, customers who have not yet deferred payments and are now interested in deferring them will be able to get a deferral of up to six months. A customer will be able to defer the principal component of the loan, but the deferral of interest will be at the discretion of the bank itself.