Bank of Israel Plans to Increase Competition in Mortgage Market
(Bloomberg) -- The Bank of Israel wants to make it easier and faster for consumers to get mortgages, moves that are likely to stoke competition between lenders.
The measures are designed to improve transparency and information on repayment costs so that consumers choose the right mortgage, the central bank said in a statement on Sunday.
The changes may fuel competition in a market that’s seen the value of new mortgages surge in the first nine months of this year to more than 82 billion shekels ($26.4 billion) amid historically low interest rates and a jump in house prices. More loans were granted in the period than in the whole of 2020, according to data from the Bank of Israel.
Israel’s Competition Authority this year highlighted the difficulties faced by consumers when comparing mortgages, and recommended that the government make it easier for borrowers to receive a range of quotes before making a decision.
The proposed reforms would require banks to provide customers with a standardized agreement in principle within a few days of application, including the projected total interest rate, anticipated payments over the duration of the mortgage, and the highest monthly payment based on Bank of Israel forecasts. The proposals, expected to come into effect in mid-2022, would bring Israel in line with international standards, according to the statement.
The increased competition between banks will help customers make decisions and “will lead to an improvement in the mortgage terms,” said Yair Avidan, the Supervisor of Banks.
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