BOI Instructs Banks to Offer 3 Uniform, Compulsory Mortgage Tracks

Photo Credit: Miriam Alster / Flash 90

The Bank of Israel has instructed banks to provide mortgage applicants with three compulsory uniform options in order to reduce the confusion among them, Globes reported Sunday.

The three options to be offered include:

1. 100 percent fixed interest unlinked;
2. One-third fixed interest unlinked, one-third variable interest linked and one-third interest linked to the prime interest rate; and
3. 50 percent fixed interest unlinked and 50 percent linked to the prime interest rate.

The three above options were presented to the bank CEOs in a video conference in which the participants discussed the increasing risk of the banks’ real estate credit portfolios.

Last week the Bank of Israel published a six-month survey of the banking system which underlined the rising risk in real estate portfolios.

BOI Governor Professor Amir Yaron and Supervisor of Banks Yair Avidan again noted the risks during their video conference, emphasizing the need to remove confusion by offering just three tracks for mortgage takers.