It's official: the limit on taking a prime interest mortgage - Will be removed ob Jan 2021

Now it's official: starting in another three weeks, on January 17, the limit on taking a prime interest mortgage will be removed, so that up to two-thirds of the mortgage on this component can be taken out. This is the cheapest component in a mortgage, but the borrower is also exposed to an increase in payment in the scenario of an interest rate increase. This relief will be relevant in three weeks to all apartment buyers (first apartment, housing improvers and investors). As for those who refinance a mortgage - he will be able to enjoy the relief a month and a half later - starting on February 28th. These gaps are due to the fact that the banks must carry out operational and automated operations in their internal systems, according to the Bank of Israel.
It is estimated that the abolition of the prime limit will significantly increase the demand in the mortgage market, both for home buyers, investors and recycling activities. As a result, the fear is that the increase in demand will also lead to rising prices in the real estate market.
Despite the relief, the Bank of Israel does not always recommend taking the maximum prime interest component.
Supervisor of Banks Yair Avidan said today, "The abolition of the restriction has the power to increase the flexibility and variety of options available to borrowers and even reduce the monthly mortgage payment somewhat. At the same time it is important to emphasize the need for careful consideration The costs and risks that exist in each of the possible routes with a forward-looking view. "
In addition, the Bank of Israel notes that next year a reduction in the early repayment fee will take effect, which should make the recycling process more attractive. Under this change, an additional 50% discount rate will be added on an early repayment fee after 8 years. This update involves the approval of the Ministry of Justice, the Ministry of Finance and the Finance Committee, and the Bank of Israel states that the process will be completed during 2021.

The mortgage market continues to boil: In November, new mortgages worth NIS 7.1 billion were taken out, according to data from the Bank of Israel published today (Tuesday). This is the highest figure since last March, which was an exceptional month due to the falls in the markets and the closure. The November figure is 12% higher than the average in the last 12 months, and 26% higher than in November last year. A total of almost NIS 70 billion in new mortgages have been taken out since the beginning of the year, 15% higher than in the

corresponding period in 2019.
November data may still be just the promo compared to what is expected in 2021. Last week, the Bank of Israel announced that it was eliminating the limit on the prime component of taking out a mortgage, so that up to two-thirds of the mortgage could be taken out on this component, which is considered the cheapest. This move is only expected to further increase performance, and later this year should also give impetus to the mortgage recycling sector. The activity in the field of mortgage recycling is relatively low today - and in November the volume of recycling was NIS 600 million.
The Bank of Israel data provides an up-to-date glimpse into the state of frozen mortgages. As you may recall, at the beginning of the crisis, more than 25% of mortgage holders wanted to freeze. Since then, more than half of them have repaid them, and the data show that there was almost no change in November, leaving NIS 52.8 billion, which is 13% of the total mortgages on the market. Apparently next month we will already see a more significant change in the data, as a large part of the freezes is expected to end at the end of the year, and according to the new loan deferral outline, there will be threshold conditions for those who will be entitled to deferred payments. As for the average interest rate on mortgages, stability and an interest rate level similar to that of October were recorded this month, and in the index-linked channel there was a slight increase in the average interest rate from 2.7% in October to 2.8% in November.