Expected volume of mortgages in 2020: NIS 76 billion – real estate

The volume of mortgages taken out by the public in Israel in all of 2020 is expected to amount to NIS 76.2 billion, according to an analysis by BizPortal of Bank of Israel data, which this year averages NIS 6.35 billion per month (yes, including in the corona period). In March, an all-time record was set for new mortgages: about NIS 8.68 billion for a single month.

The average mortgage in Israel at the end of the year will be about NIS 774,000, an increase of about 10% compared to last year, ie: an addition to the annual repayment of about NIS 5,800, or: about NIS 500 for the monthly repayment.

The upward trend in taking out mortgages is of course expected to continue, in light of the Bank of Israel’s decision to allow the public to take up to two-thirds of the mortgage repayment in the prime interest rate track, which market estimates will encourage the public to lack additional mortgages and higher amounts.

In 2019 as a whole, the Israeli public took the all-time record of NIS 67.7 billion at the time, and in fact this year it is an expected increase of about 13% in the volume of mortgages taken over the past year.

It can be seen that as the weighted real interest rate on mortgages decreases, the amount of monthly mortgages that the public takes out increases significantly. For example, when during 2011 the weighted interest rate rose to about 5%, the volume of mortgages fell sharply and the public borrowed about NIS 2.3 billion in October 2011, when in 2012 the trend changed – the public increased their monthly mortgages to almost NIS 7 billion in June 2015. Then the trend changed again – and the public reduced the volume of mortgages between 2016 and 2018, and since then the monthly volume has been on a steep rise again and during March 2020 the public took as stated no less than 8.68 billion in one month.

The total mortgage portfolio of the Israeli public today stands at about NIS 398 billion. Following the corona crisis, the Bank of Israel allowed a deferral (grace) in the payment of loans. The public, as I recall, attacked the decision and in the months of the first closure, the percentage of loans that customers sought to defer payments jumped from 3% to before the corona to about 25%. In recent months, the figure has stabilized at about 13% of all loans, which are about NIS 52.8 billion of deferred loans, of which about 45.9 billion are housing loans (mortgages) and the rest – non-housing private loans (about NIS 5.8 billion), business loans Tiny (NIS 7.6 billion), loans for small businesses (NIS 2.2 billion), loans for medium-sized businesses (NIS 2.6 billion) and loans for large businesses (NIS 2.6 billion).