The banks are making a round of you and the Bank of Israel is silent – real estate

The concerns we raised here turned out to be true. Despite the apparent relief that the Bank of Israel “granted” to apartment buyers and mortgage takers, the public does not really enjoy it. The Bank of Israel has made it possible to increase the variable interest rate track from one-third to two-thirds, and this is good news that the variable interest rate track / prime interest rate is cheaper compared to the fixed-rate track. The variable interest rate is significantly lower than the fixed interest rate, although more risky – because it can rise in the future. But the banks did not wait for the distant future. They immediately realized that there would be an onslaught on prime-rate mortgages and they raised the interest rate – that’s how a free market is, that’s how the Bank of Israel takes care of you. The increase in interest rates is general – not only in the prime tracks, but as a whole so that the effective interest rate that was supposed to fall did not fall.

This scenario is so crooked that once again a round is being made on the back of the public. A few years ago they limited the prime interest rate track to one-third when taking out a mortgage and prevented a huge public from low interest rates on their mortgage. The public pays 1% -1.5% more because of this restriction, so they remembered after 9 years and said – we were wrong. But even now in correcting the mistake, they are making mistakes again and allowing banks not to roll over the low interest rate to the public.

As mentioned, the Bank of Israel canceled the limit last month and starting this week you can approach the bank and take out a mortgage with a new mix: up to two thirds of the mortgage in the prime interest rate track and the remaining third in the fixed interest rate track, which is higher in the last decade. The truth is that there is nothing to run to the bank and take out a mortgage in the new mix. It just does not pay off. A survey conducted by BizPortal in recent days shows that the banks are not suckers and have raised the interest rates they give customers in the various routes so that they can continue to earn the same thing. They will maintain their margin and the question is whether the public will ever be able to lower its mortgage. Spoiler: Probably not. But, we have an offer that always helps. You will receive offers from several entities and will bargain. Every tenth of interest you save will save you the total mortgage by tens of thousands of shekels. Besides, we promise – we will issue a query to the Bank of Israel and the Supervisor of Banks and ask how they allow banks to take advantage of this distortion, and they do not explain that the market is competitive while everyone aligns with interest rate hikes. Perhaps the regulator thinks it is his job to monitor the stability of the banks’ profits (which is part of the matter but not everything), and not to monitor the banks that will not rob the public?

How much did the banks raise interest rates? At least one percent and the average stands at one and a half percent. If until now it was possible to get a mortgage with a prime minus 0.4% and even minus 0.6%, ie an interest rate of 1% -1.2%, then this week the lowest interest rates found were 1.9% in the prime interest rate track, and the higher ones reach 2.5% and north.

So everyone got excited when they said there would be two-thirds of this interest rate. What has actually happened in the last two days – even if you ask for fifty or sixty percent there is no longer a reduction but we are talking about a prime plus addition. The average is frame plus half. There are portfolios that can reach Prime Plus 1% and there are portfolios that can ‘qualify’ and receive Prime Plus 0.3%. I mean the lowest is 1.9%

From tests we conducted – At Bank Leumi, Prime Plus has a margin of 0.3 (instead of 0.4-0.46) and the fixed interest rates have risen by 0.1-0.3. At Otzar Hachayal Bank, they give a 1.6% prime on the face of it, but at fixed interest rates they raise interest rates by half a percent and even a full percentage.
This is a zero-sum game. You can also take a prime minus as it was until now, but the odds will be very high. Discount Bank raised the prime plus 0.5% and a slight increase on a regular basis, as well as in Mizrahi.

It is important to note that this of course depends on the customer. Not every customer will get it. Depending on several variables such as – the percentage of financing, the mortgage period, the quality of the customer (does he have a problematic history) and more. So even though the central bank has announced that the public will be able to save about NIS 500 a month in the new mix. Reality How to say: a little different.