To presentation (Hebrew)
 
·     The main policy required to deal with the housing market in order to assist households is continued efforts to increase the supply of homes, with an emphasis on areas of high demand.
·     The increasing risk in the mortgage field, and measures by the Banking Supervision Department, have led to a more fair pricing of the risks, and after years of continued declines in the interest rates on mortgages, there has been some increase in those rates over the past year.
·     In addition to increasing the supply of homes, there are other tools that can make it easier for borrowers, such as eligibility loans.  A measured increase of institutional activity in the provision of housing credit will also act to lower the prices of mortgages.
 
 
Bank of Israel Governor Dr. Karnit Flug:
 
·     Home prices in Israel have increased significantly in recent years—a situation that is not unique to Israel.  The response to the increase in home prices by increasing building starts was very slow, and only in recent years have we seen an increase in building starts to the level that we believe is more or less in line with current demographic needs.
·     The Bank of Israel interest rate, which was lowered to near-zero in order to support growth, employment, and price stability, obviously also had an effect on mortgage interest rates.  In this context, it is important to remember that the interest rate on mortgages is also influenced by long-term yields in the bond market, the banks’ risk assessments regarding the housing credit market, and other things.  As a result, we have seen some increase in the mortgage interest rates in the past year.
·     The main policy required to deal with the housing market in order to assist households is continued efforts to increase the supply of homes, with an emphasis on areas of high demand.  It is important to remember that the State controls most of the land, as well as the planning process.  The Ministry of Finance is making very important efforts in this area, and these should be continued.
·     The volume of land available for construction in high-demand areas should be increased, the duration from planning to building starts should be shortened, and there should be greater synchronization between building plans and infrastructure development.
·     The process of bringing foreign construction companies into Israel should continue to be advanced, thereby helping to narrow the productivity gap in the construction industry and to adopt new technologies.
 
·     Other tools in the mortgage field that could make it easier for borrowers:
o   It is possible to help mortgage borrowers through higher eligibility loans at better prices, as was done in the past.  The volume of loans to eligible borrowers has fallen to almost zero in recent years.  Recently, the interest rates on this type of loan were reduced, and the use of this tool can be expanded to help the eligible population.
o   Increasing the presence of institutional investors in the provision of housing credit, inter alia through securitization, can increase the supply of credit and reduce its price.  This should be done in a measured way in order to make sure that this process will not lead to a renewed increase in demand for mortgages and homes, and thereby to a further increase in home prices.
 
Supervisor of Banks Dr. Hedva Ber:
 
·     As a result of the increase in home prices, households have taken out greater loans for longer periods.  As a result, the risk inherent in housing loans has increased, both from the consumer’s point of view and from the banks’ point of view.
·     In response to the increase in risks in the housing area, the Banking Supervision Department took a series of measures to protect consumers and maintain the stability of the banking system.
·     The measures taken led to a more fair pricing of the risks, and after years of declines in the mortgage interest rates, there has been some increase in those rates in the past year.
·     In addition, in order to support an increase in the supply of homes, we allowed the banks to increase the supply of credit to the construction industry by recognizing the banks’ sale of risk to secondary insurers abroad.  In addition, we instituted leniencies for non-homeowners to purchase homes in “Buyer’s Price” projects.