Archives for July, 2007

israeli mortgage

Should I still refinance?

Is it still feasible to refinance your home mortgage? For some it will be worthwhile, for others not. As with everything else, this can only be answered on a case-to-case basis by an Israeli mortgage professional. If you have a typical inflation-linked fixed-rate shekel mortgage, you will lose money in most instances. The penalty that you will pay is based upon the average interest rate. This rate is the average of the last three months. Since the rates are rising, this means that you will be paying a penalty to a rate which is lower than what you will now receive. Let’s say you have 15 years remaining on a 20-year loan and are paying 5.2% interest. The average rates for a similar loan...
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bank of israel

And the Rates Will Rise

As you can read in this article in Globes, it is highly expected that interest rates will rise shortly. For those of us who speak with bankers daily, this is no surprise. You know how when the price of a barrel of crude oil goes up, the price of petrol goes up right away. But when the price of oil decreases it takes long weeks for the price of gasoline to go back down. The same thing is true with mortgages. When The Bank of Israel lowers rates, the banks lower their rates a few days later. However, when the Bank raises rates, the banks are already ahead of the curve. Our clients are now getting rates about 0.3%-0.5% higher than they were just...
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CPI through the roof

Report on the whalloping CPI:מדד המחירים לצרכן עלה ב-0.7% – כלכלה וחברה – חדשות – ערוץ 7 As I wrote last week, nobody has any idea what the CPI is going to be before it is reported. In fact, just a few days ago, I read a report here, also by the Ministry of Finance, expecting 1% for the whole year!mortgage israelWhat does this mean for Shlomo Mortgageholder?This month’s CPI means that everyone who had a CPI (מדד) linked mortgage now owes the bank more.If Shlomo Mortgageholder owed 400,000 NIS on his home yesterday, he owes 402800 today. Speak with an Israeli Mortgage Professional to figure out how to cover your risk to inflationary pressures.Nahala Home Mortgagesמשכנתא...
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forecasts

Forecasting Season

It is forecast season again. Let’s take a quick look at the consensus view: Value Outlook Inflation ????? Dollar 4.20-4.25 Interest 4.25% Economic Growth 5.1% This is based upon commercial bank predictions and Bank of Israel’s official outlook for 2007 and the coming twelve months forward. We’ve already seen the commercial banks raise their interest rates, so we’re not surprised to see the predicted 0.75% rise in rates in the coming months. Everyone knows that it’s coming. What I can’t figure out is the inflation. The Bank of Israel thinks that it will be 1.2% for the next twelve months. FIBI thinks that it will be 3.2%. Poalim thinks that it will be 1.3%. Discount thinks that it will be near 3.0%. It should...
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exchange rates

Mortgages on Israeli Property – an introduction

It’s time to get back to some of the basics that my clients have been asking about: Many people, including foreigners and new immigrants, purchase a permanent or second home in Israel with a mortgage. Everyone’s situation is unique, but in simple terms you have two options. Borrow in your own country, through specialist lenders for overseas properties or by re-mortgaging with your existing lender. Or borrow in Israel through Israeli banks. Inevitably there are pros and cons to these options and you should always obtain professional advice from a qualified financial adviser to review your own situation. Factors that affect your choice of where to borrow One major consideration will be currency fluctuation. For the average house-buyer the process is therefore a slightly...
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