Israeli Mortgage Interest Rate Rises, Yet Again…

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  1. In short it won’t cool the market very much because:

    1. Many of the investors in Israel’s property market are cash and don’t depend on mortgages.
    2. There’s a lot of money laundering going on in Israel. A significant amount of property sales (especially new builds) could be related to cash buyers laundering money. So those buyers don’t use mortgages!
    3. Those towing mortgages from property to property (like investors such as myself) have mortgages tied to the favourable rates of 2008 and before so this interest rate increase affects the “towing group” much less.
    4. If there are less first time buyers in the market due to harder conditions to borrow then this could simply create a “wealth vacumn” in the market where the rich trade property EVEN MORE.
    5. Forgeign investors buying second homes aren’t using mortgages, this is still a significant amount of buyers.

    The lack of space in Tel Aviv and high tourist visitation creates a very lucrative rental market in cities like Tel Aviv and Jerusalem. The Israeli government spends large amount of money marketing Israel to tourists whilst trying to cool down the property market, but its many of these tourists that are contributing their tourist dollars to the short term rental market’s investors…

    For the above reasons and the fact that there is very little else in the world to invest in right now will mean that the Israeli market isn’t about to slow down anytime soon.

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