If Shakespeare were to come back to life and see today's mortgage market, he'd probably cast governor of the Bank of Israel Amir Yaron in the role of a worker in a gas station asking a customer – to paraphrase Hamlet's soliloquy – which fueling arrangement he'd prefer, Dalkan or Pazomat.
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The fact that in June, new mortgages totaled NIS11.6 billion was mentioned in a few modest headlines, only to be forgotten after a day or two. The monthly rise in numbers, at a pace that recalls Usain Bolt's record-breaking 100-meter sprints, has, alas, become routine.
Nothing is more dangerous than such a routine. To illustrate, if the pace of mortgage taking in recent months continues – and some expect that July will break another record – then by the end of 2021 we'll reach the incredible sum of about NIS130 billion, which is twice that of a normal year and a third of the entire sum of mortgages ever taken out by the public – NIS400 billion.
It's a mistake to put the blame entirely on the shoulders of the governor of the Bank of Israel for allowing mortgage takers, since December, to borrow up to two-thirds of the mortgage at the prime interest rate, thereby fueling the mortgage market and consequently the housing market.
The main problem we've been dealing with for the past decade or so is the lack of apartment supply, which leads to a frenzied rush by the public for the few apartments still on the market, for fear that prices will rise. Which, indeed, they do (and, I'm sorry to say, with good reason!).
I think the governor made a critical mistake; however, there are other decision-makers besides him who should take responsibility for the outcome.
In the past few days, I was glad to hear the new Interior Minister, Ayelet Shaked, speaking energetically about her intention to integrate all the factors that can contribute to expanding housing supply. This is certainly an important declaration, and her plan of action also seems like a breath of fresh air after long years in which the ministers responsible for the housing market did nothing to increase supply.
Still, the mortgage question, with which we began this article, remains. According to the latest data, the average mortgage is nearing NIS 900,000 – compared to NIS 550,000 in 2015. This illustrates the problem, which can result not just in higher housing prices, but in a scenario of thousands, perhaps tens of thousands of families who, at one point or another, will have difficulty making their mortgage payments, whether due to a rise in the interest rate or because of unemployment.
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An entire generation of young Israelis will depend for most of their lives on a monthly return that significantly restricts the family budget. Families will have to cut down on important expenses such as afternoon classes and educational enrichment for their children, not to mention cuts to the family's food budget. This is an economic issue that may have major social repercussions.
What must be done immediately is to stop the mortgage craze. This can be achieved through major operative decisions to increase housing supply, place a cap on mortgages and their conditions of return, and issue declarative statements, such as the encouraging announcements we've recently heard from the Minister of Interior showing that, finally, there's a landlord in the housing market. We've issued warnings, we've sounded the alarm, but as yet – to no avail!
Roni Mizrahi is president of the Contractors' Labor Union and owner of the Mizrahi & Sons Group.
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