The Mortgage Interest Freeze Initiative: Help for First-Time Home Buyers
By Jacki Wiluzanski · · Updated · 2 min read
According to CBS data, December 2022 was the weakest month for resale apartment sales in the past 20 years, and around 53,000 new apartments were left vacant and unsold.
At first glance, the volume of transactions for buying new and resale apartments in 2022 is very similar to the volume in 2018-2020: 110 thousand in 2022, the same as in 2019, and slightly more than in 2020, when 107 thousand apartments were sold, and in 2018, when close to 100 thousand apartments were sold.
The exception is 2021, when a historic record was set as transactions for the purchase of 151,000 apartments were signed.
The first interest rate increase came in April 2022, but sharp jumps in the interest rate occurred several times during the second half of the year. The result is a sharp decline in the volume of mortgages and, consequently, a drop in the volume of transactions for buying an apartment. Through June, almost 65,000 apartments were sold. Had this pace continued through the end of the year, 2022 would have gone into the history books as one of the most profitable years in the residential real estate field, but in the second half of 2022 only about 45,000 apartments were sold, a low rate even in hindsight.
The debate over the mortgage freeze
According to a source who advised on the bill, a more moderate proposal than the one published is expected. According to the same source, "the new proposal talks about a preferential mortgage: if the prime rate rises by 1%, the bank will be able to raise it for eligible borrowers by only 0.5%. In practice, this is a new mortgage track. Gafni's proposal effectively eliminates the prime-rate mortgage: it becomes a protected rate, and there is no early repayment fee."
Today Gafni was supposed to place the proposal for discussion in the Ministerial Committee for Legislation, and tomorrow on the Knesset table: a law to freeze mortgage interest for first-time home buyers.
The Vice President of the Association of Mortgage Advisors says that "Gafni's goal is to create a dialogue and find solutions in the face of rising interest rates, which created a standstill in the real estate market.
