1 July 12 18:45–The Bank of Israel is again set to resume its attack and has chosen to confront young couples, and prevent them from purchasing an apartment. Who has 40% of the equity something like at least NIS 500,000 to buy an apartment in the center of the country?
Despite all this, Governor of the Bank of Israel Prof. Stanley Fischer is keeping his head down and continuing to make efforts to cut spiraling real estate prices. With all due respect to the mantra about fixed demand and not enough supply, the Bank of Israel knows that without help from the banks, apartment prices would rapidly fall back to 2009 levels. After all salaries have remained unchanged for the past three years, and capital that can be scratched out of parents and savings has certainly not grown over the same period. But all this has not stopped home prices from soaring 60% – even after tens of thousands of Israelis went out at night to protest the cost of living but still bought apartments the next day.
The banks, courtesy of the Bank of Israel and sponsored by the global crisis, have simply given more and more rope, to leave all the players on the field, and to continue to let low supply dominate high demand. The message is clear: You don’t have money? The bank will give you another loan. Your salary is too low? We’ll spread the mortgage over 35 years. On your way out at the ATM you can even withdraw another NIS 50,000 for your summer vacation abroad or to upgrade your car. NIS 1.675 billion was loaned in May at a level of financing of over 60% of the value of properties. Only NIS 98 million was lent in May on homes where the mortgage was worth less than 10% of the value of the property…Read More>>