Data released last week by the Bank of Israel and relate to the scope of the mortgages taken out in July, evoked mixed feelings in me. This is the amount of NIS 6.7 billion, an increase of 14% percent compared to July 2018, and 11% percent compared to last June. On the face, it is seemingly encouraging figure, indicating a revival in the housing market has already suffered four consecutive years of chronic instability, due to disproportionate expansion of subsidized mortgage program has become, inadvertently, the core market.
However, if we examine the data further, they found that disturbing. Very disturbing. It turns out, and that the Bank of Israel also admits that the rise in mortgages is a direct result of the pressure, not to say hysterical, from young couples purchasing apartments first. Most young couples buying their first apartment as part of the price occupant, when they took an average of 75% to 60% external financing to purchase a home. In other words, if the average apartment now costs around Israel NIS 1.4 million, it is funded by reaching NIS 800 thousand to one million shekels.
Subjected to dry further provided by the Bank of Israel, and in my opinion Equally disturbing, and perhaps even more, suggests that if home buyers on the open market took out mortgages at an average of approximately -747 thousand shekels, the buyers of apartments as part of the price occupant took out mortgages at an average of approximately -863 thousand shekels . The figures are simple: there are approximately -116 thousand shekels more, representing 62% of the average apartment on the open market and 72% of an average apartment framework occupant price, the price of which around 1.2 million. Short and to the point, this is absurd incomparable.
Price occupant, the flagship program of the Ministry of Finance, was formed in order to allow the recall of young couples reach their own apartment, and lowered, with the national average, housing prices in this project about 200 thousand shekels compared with apartments on the open market. Poet's intention "was then, young couples take less external financing to purchase a home, and certainly not to take funding for higher amounts, but in reality the situation is reversed. Moreover, Our calculation Chamber contractors found that if Nglm the extra costs faced by acquiring an apartment at the occupant, such as the average waiting time of 5-4 years, the cost of construction materials, rent for the interim period specification apartment Low requiring in many cases, upgrading and so forth , any assumption on the price occupant versus "ordinary apartment" amounted to 70-60 thousand shekels on average. In the periphery, by the way, there is no discount.
The implication is clear: to discount this funny, almost a discount statistically "normal" to get any purchase an apartment on the open market, have masses of young couples bring another 120 thousand shekels financing they needed to purchase the apartment. Add to that the amount of approximately -863 thousand shekels is only average, and 30% or so from the first apartment purchasers, taking the amount of funding and more million, we fully understand the gravity of the situation.
Less serious problem lies not in danger, tangible in my opinion, that a large portion of mortgage customers will not be able to meet future burden of monthly payments. Currently, although lower interest rates and the expectation is that this trend will continue and will lead to a further reduction in interest rates. However, it is important to remember that on average are taken into mortgages for 20 years, sometimes 30 years, while during the period for so long - and past experience proves it - occur mostly upward changes in interest rates, any change means an extra hundred dollars monthly repayment.
Disperse the fog
Imagine the future of an entire generation of young Israelis with families who have had a Corcm also return mortgage is growing, also hold two cars to get to work every morning from the periphery to the center and back, and a family to support - including complementary education and activities for children, recreation and entertainment. Is all this will be possible in future to the same family "average" acquired apartment "average" as part of the price occupant? I doubt. While the Bank of Israel reiterates that our situation is certainly reasonable in relation to a large part of the OECD countries, but I'm afraid Probably "This will become overnight No way", if and when interest rates begin to flow upward. Sooner if later, it will happen.
Roni Mizrahi.
In view of the upcoming elections, I have the following four general tips:
• immediately bury the subsidized mortgage program. This program not only increased the taxpayer 7 billion (according to the Ministry of Finance, in my opinion a much higher amount), but also the entrance to the housing market stagnation into a honey trap inadvertently "young couples.
• The space program worthy of the price occupant scoring system replaces the good old, in which the young couple will receive individual assistance according to his ability and according to his income, including loans and grants anywhere.
• You might consider fixing interest rates on all mortgages, fixed interest for the entire period of receiving a mortgage. True, this is not an ideal solution and has a price tag not just in terms of the state, but the alternative, mortgage crisis and the threat of a young generation lost, much worse.
• approval authorities should be charged an extra 30% according to the guidelines apartments IPS-window. In this way, those apartments will be designated accounts payable and young couples at a reduced price of 400-200 thousand shekels, provided that contractors would be obliged to improving respect these apartments and the state will allocate them for young couples and weak population without having to put in his pocket.