The Bank of Israel will seek to end the inability of the public to compare offers from the different banks for mortgages that they are seeking. A source close to the matter has told “Globes” that the Bank of Israel will soon publish new instructions that will help mortgage takers make better informed decisions about which mortgage offers are best suited to their economic circumstances. The new instructions contain a number of far reaching changes, which the Bank of Israel hopes will create a system of genuine comparisons between the various mortgages on offer from the different banks.
All-time record mortgages taken in Israel in June
As part of the planned reform, the Bank of Israel, under Governor Prof. Amir Yaron, will require that the banks set up a digital system that allows mortgage takers to receive initial offers from several banks, so that they can receive a general picture before actually going to any bank branches.
Another measure that the Bank of Israel is promoting as part of the reform is creating a number of basic unified tracks that will be identical and divided up in the same way. At the moment the price of mortgages depends on the division of the loan between prime interest and linked interest and variable fixed interest. The banks set various margins for the different tracks in the mortgage and the Bank of Israel is now asking that the banks create three or four comparable tracks.
In addition, because the mortgages are long term, and can be spread over as much as 30 years, the Bank of Israel will demand that the banks present customers calculations that will allow them to know ahead of time how much they can expect to have to pay back each month throughout the lifecycle of the mortgage and what exactly they are paying for.
The Bank of Israel is currently working on the new instructions, which are being formed due to the sharp rise in mortgage taking, which reached a record NIS 11.6 billion last month.
At the same time research published by the Israel Competition Authority in January found that the Israeli public does not compare the different mortgages offered by banks before applying for a mortgage.
The Bank of Israel said, “We cannot respond to the measures mentioned in the article. As said in the past by the Governor of the Bank of Israel and the Supervisor of Banks, the Bank of Israel is examining a number of measures for increasing transparency and competition in the mortgages market and simplifying access for the benefit of customers. If and when these measures come to fruition, the Bank of Israel will inform the public in an orderly way.”
Published by Globes, Israel business news – en.globes.co.il – on July 12, 2021
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