Archives for August, 2007

interest rate

Rates on the Rise

The interest rate in Israel is again at 4% after the Bank of Israel raised its key discount rate yesterday. Read about it here. I remember one of my first blog posts here I wrote about how amazing it was that the rate went to 4%. Since then, it went down to 3.5% and has now gone back up to 4%. The difference is that the mortgage banks are way ahead of BoI. Then, the benchmark 20-year mortgage (which is bad for most people) was going less than 4%, now it is approaching 5%. For most people, yesterday’s action is meaningless to their personal finances. The banks have already raised their mortgage rates, and will probably continue to do so. Prime rate mortgages are...
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banks

Ynet:Beware Discount

See this from YNET:דיסקונט הבטיח משכנתא זולה אבל לא מצליח לספק אותה – This is no news for us. Bank Discount has been making promises right and left to people.Do you know anyone who has actually got one of their promised subsidized mortgages? Neither do we. We have advised our clients against this program from the beginning. Their so-called subsidy is only 0.3% less than the going rates. Our clients get better rates than this at the real banks when we get them approved anyways. As I always say, rate is only one parameter of the loan. There are so many other things which are either hidden or not understood which impact mortgages over time. Discount gives you a good rate, but locks you...
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bank of israel

Say little and do even less

Yesterday Governor Fischer held a press conference. You can read a summary here: Central bank: Subprime mortgage crisis does not affect Israeli economy – Haaretz – Israel News I have written about the sub-prime lending crisis in the USA since well before it was a crisis. I used to work in that house of cards, and got out shortly before its inevitable collapse. Throughout the world, this has raised the cost of borrowing. In Israel, we have consistently seen the banks raise interest rates on home loans, despite the fact that the Bank of Israel has raised rates only 0.25%. In short, Fischer said that he is doing nothing, but everyone should relax, because if anything needs to be done, he will do it....
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inflation

Inflation even worse than expected

The CPI (מדד) was announced last night. This month it was 1.1%. Last month it was 0.7%. Right now, inflation is on course to reach 3.1% for the year. Since the country’s budget is based upon expectations of 2-3% inflation, this means that more serious measures will be taken by Bank of Israel to fight inflation. For the consumer this means that interest rates will rise. The banks have already been raising rates. Even though the Governor of the Bank of Israel has raised rates by only 0.25% over the last two months, the banks have raised interest on mortgages in most programs by over a full point during the same period. Governor Frankel will raise interest rates again. As the banks have already...
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Even worse then Hefsitba?

In today’s NRG: חפצים ביקרם There are some cases that are worse than Hefsitba. All of those people will eventually get their properties.I have said it before, and I will reiterate it now. We recommend that everyone buy properties that are at least 5 years old. Don’t believe promises on paper. The so-called “savings” from buying straight from the developer are usually less than the additional costs of your years in limbo. The CPI will be updated this evening. The consensus is a 0.7% rise. Stay tuned....
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israeli mortgage

Heftsiba’s Bankruptcy – What it means to you

A few months ago, I was negotiating with a local, English-language financial newspaper. They asked me to write a trial article. I wrote about the recently collapsed US sub-prime market and the lessons and implications for us. The editor didn’t understand that the piece wasn’t about the US market, but about what is likely to happen in Israel. It seems that she didn’t understand that even though events don’t directly impact us, their ramifications go far beyond the relatively small number of people connected to the specific event. Such is the case with Heftsiba. Heftsiba is one of Israel’s largest residential construction companies. In particular, they are the largest manufacturer of new homes for the haredi community, building an estimated third of the projects...
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exchange rates

"The shekel remains substantially undervalued, according to our estimates."

The quote that titles this entry is according to this Morgan-Stanley opinion. They think that the Shekel continues to be undervalued. They are also quite critical of our low interest rates. I imagine that they are quite pleased with the recent rising rates, though it is not mentioned. Israel continues to increase its exports at the same time when a growing number of foreigners are investing here. The amount of foreign currency entering the country continues to rise. A good deal of private capital is also finding its way to Israel, with many foreigners buying an Israeli home.What does this mean for Shlomo Homeowner? First of all, it probably means that our economy might be a little more stable than those in the media...
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