Number of potential homebuyers jumps

The March Consumer Confidence Index: One in ten Israelis is considering buying a home within the next six months. The willingness of Israelis to buy homes in the near future rose strongly in March 2011, justifying last week’s new directive by Governor of the Bank of Israel Prof. Stanley Fischer to restrict the variable interest component of mortgages in order to cool housing demand. The Consumer Confidence Index for March, compiled by Globes Research and pwc Israel, found that 10.3% of respondents expressed an interest in buying a home within six months. In February, 8.8% of respondents expressed an interest in buying a home within six months; in other words, the number of potential homebuyers rose 17% within a month. “Willingness to buy a home” includes people who have already decided to buy a new or second-hand home, and people still deliberating whether to buy. A breakdown of the figures by buyers and fence-sitters shows that number of buyers did not actually increase, and actually fell in relative terms as the number of fence-sitters increased. The proportion of respondents planning to buy a second-hand home fell to 2.6% in March, the lowest level in a year. This means that the increase in the willingness to buy a home is only semantic; the increase in the willingness to buy a home in March is due to the fence-sitters, whose numbers nearly doubled. Fence-sitters accounted for 40% of potential homebuyers in March, up from 25% in February. According to the Bank of Israel, 86% of mortgages approved in March were variable interest mortgages. 48% of all mortgages granted were prime rate-based variable interest mortgages. On average, the interest rate on prime variable interest rate mortgages, including recycled mortgages, continued to fall over the past year, even though the prime interest rate rose, with the banks absorbing the higher cost.   Published by Globes May, 2011,  by Erez Wollberg

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