"In the 3rd Q negative balance in bank acounts decreased by NIS 700 million to NIS 11 billion"

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by Ifi Reporter Category:Banking Jan 20, 2020

Data published by the Bank of Israel in the third quarter of the year negative balance (overdraft) decreased by NIS 700 million to NIS 11 billion - a decrease of 6%. The decrease in the share of overdraft from the total consumer credit. As of the end of September, bank overdrafts Only 5.5% of consumer credit was up, compared to over 7% at the end of October 2016, when the downward trend began.
The Bank of Israel raises several options that can explain this trend. The report said, "There is an increase in credit options for households, so that the ability of consumers to borrow neatly - and lower interest rates on negative balances in the fetal account - has improved." And in plain Hebrew: Israelis have realized that there are better and cheaper alternatives to taking credit, than To be over-drawn.
 The Bank of Israel also notes that positive macroeconomic data on the state of the economy may support such a trend: "Improving household income, which is reflected in a decline in unemployment and an increase in average wages in the economy, as well as an increase in household awareness of financial literacy."
If, after all, a customer is in a certain period with higher revenue expenses - which is not recommended over time - it is preferable to take a regular consumer loan, which is usually at a significantly lower interest rate than the overdraft. In recent years, the non-banking credit market has expanded, also due to the Strom reform, which has separated credit card companies from the big banks.
 It has been widely said that changes in this market could lead to credit flooding, but this may also have a positive result - an increase in public awareness of the various players, making it more appropriate to close the loan account. However, it is important to emphasize that over the wrong time, taking out more and more loans to close the minus, as this only brings the client into a mountain of debt.
Another interesting trend emerging from the Bank of Israel data is a surge in mortgage refinancing over the past year. While in 2017-2018, the monthly volume of mortgage repayments was less than NIS 600 million, in 2019 (as of the end of October) it already averages over NIS 900 million per month.
This trend can be explained by the fact that some banks have become more aggressive at the prices they charge in this market. But the bottom line is that in 2019, the Israeli public has slightly improved its financial behavior with regard to loans, by taking cheaper loans compared to its situation earlier this year. True, there is still much to go on when it comes to financial education and public awareness on these issues, but you can be optimistic: begin to see improvement.

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