Supervisor of Banks Yair Avidan today presented a review of developments in the housing credit market in Israel and abroad to the Knesset Economics Committee.  The Supervisor began by discussing the lively activity in the housing credit market in the past few months, and its implications for increasing the quality of the bank credit portfolio.

 

The Supervisor noted that more than 80 percent of mortgage borrowers in 2021 were first-time home buyers or those improving their housing situation.  He also noted that there has been a constant decline in the average interest rate during the past four years, and that despite the cancellation of the prime rate restriction, the public and the banks are acting with wisdom and showing responsibility.

 

The Supervisor emphasized the issue of fairness, and presented the principles of fairness that guide the Banking Supervision Department, including the handling of public complaints, fairness in advertising and marketing, and protection of weaker population groups.

 

In addition, the Supervisor presented a series of planned consumer measures to increase information transparency for customers and to improve the competitive environment in the field of mortgages.  He noted that the reform is expected to come into effect toward the end of the first half of 2022.[1]  As part of the reform, the banks will be required to provide their customers with an initial approval in a uniform manner, in a short time frame, and online.  The planned measures will ease the process of taking a mortgage from three standpoints: transparency and ability to compare, simplicity and ability to understand, and efficiency in carrying out the process.  These measures will help customers make informed decision, strengthen their power, and thereby improve the competitive environment in the mortgage market.

 

In addition, the Supervisor reviewed the various measures that the Banking Supervision Department has taken in the past decade, which worked to maintain the good quality of the portfolio, both from a systemic view and when compared internationally, as well as the portfolio’s inclusion and management in the banking system.


According to the analysis he presented, despite the worsening of some of the credit quality indices, the risk in the portfolio remains relatively low.

 

In summation, the Supervisor noted that the Banking Supervision Department continues to constantly monitor developments and trends in this market, and will continue to improve the state of customers while at the same time ensuring the stability of the banking system.

 


[1] See the press release from November 14, 2021 regarding “Consumer Reform to Increase Information Transparency for Bank Customers and to Enhance the Competitive Environment in the Mortgage Market”, https://www.boi.org.il/en/NewsAndPublications/PressReleases/Pages/14-11-21.aspx​