A coalition MK is pushing Israel’s central bank to significantly raise the limit on borrowing for home mortgages.
MK Michael Bitton (Blue and White), chairman of the Knesset’s Economics Committee, called on the Bank of Israel to lift its current borrowing limit of 75% for mortgages, saying the current ceiling is too low given the rising cost of housing.
Speaking at a hearing of the Economics Committee Sunday, Bitton said the Bank of Israel should allow borrowers to take on mortgages covering as much as 90% of the price of their new home.
Bitton suggested the Bank of Israel begin with a pilot program, raising the borrowing cap to between 80 to 90%.
"The financing limit is from 2012, and no longer relates to the continued rise in housing prices," Bitton said.
"Many mortgage borrowers take out a supplementary loan - from banks or a non-banking institution, usually for a shorter term and at a higher interest rate than the mortgage itself."
But Ziv Naor, head of banking supervision at the Bank of Israel, pushed back on Bitton’s criticism, noting rising inflation rates, which have forced the Bank to raise interest rates from 0.1% to 0.75% for the benchmark rate.
"The current perception is that the risks do not justify easing restrictions.”
"Interest rates and inflation are rising, and so are monthly payments of those who have taken out loans. The public needs to understand the risks and think carefully about whether they will be able to bear these loans."