BoI to force banks to be more competitive on mortgages

The Bank of Israel will seek to end the inability of the public to compare the offers of different banks for the mortgages they seek. A source close to that told “Globes” that the Bank of Israel will soon publish new instructions that will help mortgagees make better informed decisions about which mortgage offers best suit their economic opportunities. The new guidelines contain a series of far-reaching changes that the Bank of Israel hopes will create a system of true comparisons of different mortgages offered by different banks.

Total mortgages taken over in Israel in June

As part of the planned reform, the Bank of Israel, under the governor prof. Amir Yaron, require banks to set up a digital system that allows mortgage users to get initial offers from several banks so they can get a general picture of actually going to any bank branch.

Another measure promoted by the Bank of Israel as part of the reform is to create a series of basic unified clues that will be identical and divided in the same way. Currently, the price of a mortgage depends on the division of the loan between the base interest rate and the linked interest rate and the variable fixed interest rate. Banks are setting different margins for different mortgage paths, and the Bank of Israel is now asking banks to create three or four parallel paths.

In addition, since mortgages are long-term and can be spread over as long as 30 years, the Bank of Israel will require banks to present budgets that will allow them to know in advance how much they can expect to have to repay each month during the mortgage and for what exactly they pay.

The Bank of Israel is currently working on new instructions that are being formed due to the sharp increase in taking out mortgages, which reached a record 11.6 billion NIS last month.

At the same time, a survey published by the Israeli Competition Authority in January showed that the Israeli public does not compare the different mortgages that banks offer before applying for a mortgage.

The Bank of Israel said, “We cannot respond to the measures mentioned in the article. As the Governor of the Bank of Israel and the Bank Supervisor have said in the past, the Bank of Israel is examining a range of measures to increase transparency and competition in the mortgage market.” when these measures are implemented, the Bank of Israel shall duly inform the public. “

Posted by Globes, business news in Israel – en.globes.co.il – July 12, 2021

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