The mortgage market slowed significantly in October, ostensibly as a side effect of Operation Protective Edge in August, banking-industry observers say.
A total of 3.5 billion shekels ($920 million) of new mortgages were taken out in October. That’s down 20% from October 2013 and it’s 18% lower than the monthly average 4.28 billion shekels for the preceding 12 months.
The figures mean October was the slowest month for new mortgages this year.
On average, mortgage loans are taken out about two months after a contract is signed on a home, due to the bureaucratic process involved in receiving approval for a mortgage.
The public has taken some 42 billion shekels in new mortgage loans this year. At this pace, 50.4 billion shekels in new mortgages will be taken out in 2014.
Last year was a record year for mortgage loans, with a total of 51.7 billion shekels, indicating a 2.5% drop for 2014.
These numbers indicate that the housing market remains relatively strong, even though many buyers are expecting the government to take measures to lower housing costs. These steps include Finance Minister Yair Lapid’s proposal to eliminate value-added tax for first-time home buyers.
The average mortgage is for 20 years.
Interest rates were lower in October for loans that carry fixed rates and are unlinked to inflation. The average loan of this sort was for 15.8 years, with annual interest of 3.5%. Last year, the average interest rate for these loans was 4.33%.
Average interest on a 23-year variable-rate non-inflation-linked loan was 1.55% last month. Fixed-rate inflation-linked loans averaged 19.3 years and an interest rate of 2.14%.
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