mortgage israel

Bank of Israel Shaking Up Mortgage Market

As Israel is not as service oriented or as developed in some ways as the US market, up until 10-15 years ago there were few Israel mortgage brokers out there. Israelis tend to not want to pay for extra layers, and for the most part dealt with the banks by themselves. Naturally it was the American Olim, while struggling with their own mortgages, who wondered why there was no such service. 

The combination of a complicated array of choices for mortgages, fixed, variable, linked to various indices etc. together with the banks tendency to make sure you don’t understand too much, meant that anyone short of professional would have a hard time figuring out how to get the best deal for a mortgage in Israel. Let alone try to do this with multiple banks!

And thus began the mortgage brokerage industry in Israel. Olim and other Anglos realized quite quickly that it could net them huge savings by going through a knowledgeable and well connected broker. That is pretty much standard today among these segments of the population.

But Israelis are tough people. You know, the ones would never ask directions even if they are totally lost, even before WAZE came about.

With record breaking amounts of mortgage loans being taken each month, the government is starting to grow concerned about default. To help the borrowers, according to a Globes report, the Bank of Israel is now changing protocols for banks to offer mortgages. The idea is to make choosing mortgage tracks more transparent. It is said to add simple tools for potential borrowers to compare rates between banks using the same variables. It will also force the banks to show clients the payback rate over the life of the mortgage breaking down interest and principle. These are major reforms that are on the way. A digital system will be set up online, for homebuyers to receive initial offers from multiple banks.

Mortgage brokers have little to fear. I am not a mortgage broker, and receive nothing from any mortgage brokers, yet I believe that this transparency will only awaken the sleeping consumers that are being taken advantage of by the banks, to wake up and understand how little twists have a major impact. At that point they are all liable to run out and get themselves a good broker. Except of course the most hardened among our “Am Kshei Oref” who NOW have everything under control!

Feel free to contact us for more help. See our beginner guide to Israel Mortgages to learn more.

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