sharp decrease in the volume of mortgages taken by Israelis in January: Almost NIS 10 billion

In January 2022, there was a sharp decrease in the volume of mortgages taken by Israelis compared to December, when an all-time record of mortgages by homebuyers was set. This could indicate the purchase of fewer apartments at the beginning of 2022 than in the last months of 2021.
Data from the Bank of Israel published today (Sunday) show that in January the public took out almost NIS 10 billion in housing loans (to be exact: NIS 9.966 billion), compared with NIS 12.219 billion in December 2021.
In November the public took NIS 10.985 billion, in October NIS 10.688 billion and in the holiday month of September "only" NIS 7.128 billion. From June to August, more than NIS 11.5 billion in mortgage loans were taken out every month. The total volume of mortgages in 2021 crossed the 100 billion mark for the first time and stood at NIS 116.09 billion, with a monthly average of NIS 9.674 billion. This is compared to a total of NIS 78,108 billion in 2020 (a jump of almost 50%).
Of the loans in January this year, NIS 881 million were index-linked at fixed interest rates, NIS 1,625 billion index-linked at variable interest rates, NIS 3.204 billion at unlinked fixed interest rates, NIS 4.173 billion at variable linked interest rates and a low amount of NIS 82 million foreign currency-linked. Fixed NIS 4.107 billion was taken out and NIS 5.858 billion in variable interest.
It can be assumed that in view of the developments in the markets and the fear of rising interest rates, the share of fixed-rate loans will now increase, although they are higher.
Estimates of the decline in mortgage taking are due to a possible impact of the economic housing plan presented by the Ministers of Finance, Housing and the Interior on October 31 last year.
The plan introduced clauses that, if implemented, would probably reduce the rise in apartment prices and now there is an estimate that although the rise in prices will continue, they will soon rise at a reduced rate.
This will be affected by some sections of the plan, beyond the fact that investors rushed to take out loans before raising the purchase tax, as well as sections in the economic plan to curb the rise in housing prices, which will reduce the viability of buying apartments for investment.
The government housing plan included, among other things, granting permission to split apartments, increasing construction starts by 280,000 in the coming years that will increase supply, accelerating construction with urban renewal, converting residential offices, increasing residential building rights, encouraging construction on private land and eliminating overuse of residential apartments.