Supervisor of Banks is promoting an outline for deferring debts in respect of loans and mortgages

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by Ifi Reporter Category:Capital Market Nov 23, 2020

The Supervisor of Banks is promoting a new outline for deferring debts in respect of consumer loans and mortgages. In the current situation a borrower who was interested in a deferral received it from the banks automatically with the help of principal payments of the debt in respect of consumer loans and mortgages. According to the outline, it appears that there will be no sweeping postponement of payments - and from now on it will be done differentially.
The outline will be relevant for households whose income has dropped significantly as a result of the corona crisis - that is, by at least 40%, and with a net income of up to NIS 20,000. The loan will be extended for a period twice as long as the original loan period. That is, a borrower who, for example, has one year left to repay his loan will receive an extension for another year. The maximum extension period will be four years. With regard to loans from credit card companies, there will probably be a three- to six-month deferral of the debt repayment.
In the field of mortgages, during the two years following the deferral of repayment the borrower will pay at least 25% of the monthly repayment. Accordingly, the amount that will accrue during this period will be spread over the rest of the mortgage period - which will cause the borrower to increase the monthly repayment. Also, in both consumer credit and mortgages the original interest rate will be maintained for the borrower.
According to data from the Bank of Israel, the banks postponed repayments of 738,000 loans until mid-September, including about 174,000 mortgage loans, in the amount of NIS 2.9 billion. The data from the Bank of Israel indicate that about 60% of the borrowers who sought to defer the mortgage repayments returned to pay it in accordance with the repayment schedule set for them.
The discussion on the subject is now focusing on those who are still having difficulty paying the mortgage, given the decline in family income. Estimates by economists at the Ministry of Finance indicate that in about 54,000 households that took out a mortgage, at least one of the couple lost his job during the corona crisis.

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