“We took this step out of a desire to facilitate with the public of borrowers,” says the Supervisor of Banks at the Bank of Israel, Yair Avidan, “by abolishing the restriction, increasing the flexibility and variety of options available to borrowers The need for careful consideration by the borrower when choosing a mortgage basket, in order to take into account the costs and risks that exist in each of the possible routes with a forward-looking view. “
For new home loan recipients – the directive will take effect in about three weeks, on January 17, 2021. For housing loan refinancers, the directive will take effect on February 28, “due to the potential operational burden, and to allow the banking system to prepare properly”. As part of the benefit, the restriction regarding a housing loan intended for financing the early repayment of a loan will be abolished (at the bank where the loan was taken or through another bank).
As a complementary measure, an examination is currently being conducted at the Bank of Israel regarding the method of calculation and the level of the early repayment fee on housing loans, which will reduce the mortgage cycle when a borrower comes to take this step. Updating the early repayment fee mechanism involves consultations with the Ministry of Justice, and requires the approval of the Minister of Finance and the Knesset Finance Committee. This procedure is expected to be promoted during 2021.
The Bank of Israel emphasizes that additional restrictions on housing loans remain in place, including the ratio of the loan to the value of the property (LTV), the amount of the monthly payment as part of household income (PTI) The remaining will be given at a variable interest rate.