The mortgage market has been booming in the past year. If the rate of growth in the coming months resembles the rate in first half of the year, 2013 will see a record amount of new mortgages, in excess of NIS 50 billion.
The main factor driving the boom is the low interest rate, which the Bank of Israel itself has set. On one hand, the Bank of Israel is imposing restrictions on mortgages, while on the other hand, it is fueling mortgages with the low interest rate. Another factor contributing to the rise in mortgages is the VAT hike, which caused homebuyers to close deals before it came into effect. It seems that public is not waiting for government declarations about plans to lower home prices to materialize, because even if the government improves the situation in the real estate market, it will take a long time before the results of any measures taken will be seen.
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