The head of Israel's parliamentary economics committee called on the central bank on Sunday to examine allowing prospective homeowners to take out mortgages of more than 75% of a home's value as a way to help buyers cope with skyrocketing housing costs.
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MK Michael Bitton, during a committee meeting on Sunday, urged the Bank of Israel to look into a pilot program that would allow mortgages to reach between 80% and 90%. Israel has long had conservative banking regulations to protect the banking system.
Along with rock-bottom mortgage interest rates, housing prices have more than doubled since 2010, with a 16% rise over the past year alone. Tent protests are starting to pop up across Israel in a similar fashion to 2011.
Data show that a four-room apartment in Israel averages nearly 2.5 million shekels ($723,380), with prices far higher in Tel Aviv, Israel's financial and cultural capital.
"The (75%) 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."
Bank of Israel official Ziv Naor noted that just 0.02% of mortgage buyers have significant repayment issues.
"The current perception is that the risks do not justify easing restrictions," she said. "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."
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