Jerusalem Families Carry Israel's Heaviest Mortgage Burden

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Jerusalem families are making the biggest mortgage payments of anyone in the country, with an average monthly payment of NIS 6,062, according to an analysis released by AMG Mortgages this week.

The average mortgage in the capital is NIS 1.05 million, which AMG attributed to the city's high housing prices and poor population. That means families have less savings to buy expensive homes, saddling them with large mortgages to repay.

"Residents in cities with lower socioeconomic parameters need a higher percentage of financing even when property prices are relatively low, as opposed to cities with a higher socioeconomic profile, where the proportion of financing is lower while property prices are much higher," explains Amit Kaminsky, AMG's CEO.

The lowest mortgages were on homes in Be'er Sheva, where the monthly repayment was half as high as in Jerusalem, said AIG, a home loan consulting company.

The study was based on more than 600,000 mortgages, with an average term of 18 years.

Tel Aviv came in second place among Israeli cities, with monthly payments averaging NIS 5,793 on mortgages reaching an average of NIS 1 million; followed by Rishon Letzion with NIS 5,563 in average payments on mortgages averaging NIS 967,000.

Homeowners in Bat Yam borrow the largest proportion - 62% of the value of their properties - followed by Netanya and Hadera residents, who borrow 61% of the value of their homes, and Haifa and Rishon Letzion inhabitants, who borrow 60%.

The lowest borrowing rates were in Tel Aviv and Ashkelon - 45% - attesting to the high equity residents have in their homes and more modest mortgage needs.

"This shows that the Bank of Israel mortgage limitations are relevant for the lower socioeconomic class," said Kaminsky. "In order not to hurt these people in the future, this equation needs to be taken into account in any future plan that includes limits on mortgages."

The central bank at the end of last year imposed loan-to-value ceilings on new home loans. For most borrowers, they are set at 75%.

A residential building in Jerusalem.Credit: Emil Salman

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