New Mortgage rules for buying property in Israel

Cheshvan 14, 5773, 30/10/12 12:16

Bank of Israel: Tighter Mortgage Rules Will Lower Home Prices
New rules will tighten the amount of money a homebuyer can get in mortgage money

David Lev

Supervisor of Banks Dudu Zaken on Monday issued new restrictions to mortgage banks regarding the amount of money a home purchaser must put down, and how much a bank can finance a home for.

Beginning in November, banks will be able to finance only up to 70% of the cost of a home with a mortgage. That is the maximum possible mortgage; the Bank of Israel would prefer to see mortgages of no more than 60% of the value of a home. Homebuyers will have to either come up with the rest in a down payment, or use other vehicles if they wish to borrow more money.

An exception will be made for individuals or families that have never owned a home before; they will be able to borrow up to 75% of the cost of a home. In addition, if a buyer already owns an apartment or home and is not selling it in order to buy a new home, and intends to hold onto it as a second property, banks have been instructed not to provide them with more than 50% of the cost of a home.

Until now, there was no limit on the size of a mortgage a homebuyer could get for any property. The rules apply to both Israelis and foreign residents.

The rule change is perhaps the most ambitious – and certainly the harshest – measure that the government has taken to lower housing costs. In a statement, the Bank of Israel said that in the past few years, easy credit has encouraged many more people to buy properties, and has fueled the sharp rise in housing prices in Israel. In addition, the Bank said, the rule change will help Israel avoid the types of housing and property bubbles that have caused havoc in economies around the world, from the U.S. to numerous European countries, to China.

Israelis see their best investment is in Real Estate– don’t get pushed out of the market!

Real estate is only investment option

In July, Israelis began to sense that the housing market is all that is left, as they hear the scream of fighter-bombers taking off to strike Iran.

by Avi Temkin  12 Aug 12 18:01

As far as can be judged, a turnaround occurred in July in how Israeli households assess the past and current economic situation. In July, Israelis finally realized that the economy is not as stable as they were led to believe, and that financial markets are far more risky than they had assessed. Not just reports about the crisis in Europe, but mainly domestic reports about “sovereign decisions” by Prime Minister Benjamin Netanyahu and Minister of Defense Ehud Barak. There is no better proof about households’ conclusions than the Ministry of Finance’s latest survey on the housing market.

According to the picture described by the ministry today, the housing market was stagnant through June, its condition for the preceding year. Home prices and sales fell slowly, although the situation was better than in June 2011.

But something unusual happened in July, says the Ministry of Finance. “Preliminary figures for July indicate an unusual increase in the number of transactions, which reflect the highest level of sales for any single month in years.” The ministry goes on to say that investors drove the housing market.

It is quite possible to explain the unusual rise in sales to interest rate cuts, both those carried out and the ones expected. But this is not enough to explain the turnaround implied by the Ministry of Finance, especially since it is not all clear whether the real interest rate has fallen – it may have risen due to the drop in inflation.

It is therefore more reasonable to assume that, in July, Israelis began to sense that the housing market is virtually the only investment channel available, as they hear the scream of fighter-bombers taking off to strike Iran, and talk about the financial crisis that such a strike will cause.

If this interpretation is correct, then the coming months should see a transfer of money from financial assets to real estate, as the public seeks a safe haven for its money. The direct consequence of this development is that Israel’s financial markets are already seeing the results of Netanyahu and Barak’s initiatives. The real estate market is just a symptom of this reality.

Published by Globes [online], Israel business news – – on August 12, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

Earn more money here and save taxes too!

From Globes Real Estate

Accounting firm Baker Tilly reports that Israelis pay lower taxes on real estate deals compared with other countries.

The taxes examined are purchase tax paid on purchase of a property, tax on rental (by maximum tax bracket), and capital gains tax on the sale of a property. Israel was compared with Canada, Australia, Spain, Russia, the US, France and Japan.

Landlords can draw encouragement from the fact that Israel has the lowest tax of any country examined. Israel is somewhere in the middle on capital gains tax; tax rates (on second hand apartments) are higher than in Spain, the US and France but lower than the tax paid on the same apartment in Canada, Australia, Russia and Japan.

Baker Tilly Israel partner and tax manager Guy Reshtick said, “Tax in Israel is not as high as people think. Taxes are high in Israel but in matters relating to real estate tax, our situation is improving. There have been changes over the years that have lowered the sums required from apartment sellers and buyers. For example, betterment tax that in the past amounted to 50% of capital gains fell to 20% a decade ago – and that is a direct profit for apartment sellers.”

He added, “And here too apartment sellers are given a complete exemption from betterment tax on the sale of an apartment once in every four years.

Here is one great example of an outstanding real estate investment. But, don’t hestitate for another second!

Foreigner\’s guide to property m… JPost – Business – Real Estate

A new real estate column: Property expert Lyle Plocher gives advice and tips for those from abroad looking to invest in Israeli property.


via Foreigner\’s guide to property m… JPost – Business – Real Estate.


For information about buying opportunities in the North, please contact us. The real estate marketplace is very favorable right now, whether you are ready to live here or looking to make an investment.

Here is a great resource to help you with your purchase of a home in Israel or your real estate investment

Here is great news for all of you overseas buyers. Mortgage Israel, and their partner Forex Israel can help you with all of your real estate purchase financing needs and also help you to protect your purchasing power.

Mortgage Israel was founded in 2003 to assist people in obtaining financing for Israeli real estate, both in the residential and commercial sectors. They were the first Mortgage company of its kind in Israel, catering exclusively to the international English speaking market and essentially introduced mortgage brokerage to the Israeli banking system. Their clients include local and international buyers and they work closely with local lawyers, various real estate companies, builders and other industry professionals. Their head office is based in the center of Jerusalem, with offices in Ramat Beit Shemesh, Ramat Gan, Ranana and Toronto, Canada.

Mortgage Service

Below are some of the services offered.

  • Up to 90% loans, 30 year term, at the lowest bank rate
  • Refinancing and home equity loan
  •  loans available in all currencies
  • access to advice and research about the many loan options available in the market

Foreign Exchange Service
Through their sister company Forex Israel, Mortgage Israel also offer an additional service that assists clients in sending money to Israel at much lower exchange rates and fees than the Israeli banks. Since 2005 they have been assisting clients with sending money to Israel for Property Purchases, Investments, Mortgage payments, Living expenses and Salaries. To see more about these services please visit their website at
Some of the Forex Services include:

  • Wire Transfers –  at much better than bank rates !
  • Forward Contracts –  Lock in the rate for up to 1 year in the future  – used for protecting against the rate falling when purchasing a property or other larger purchase
  • Check Cashing at the lowest rates in the market – 0.5% fee

For more information, visit their website And, when you are ready, please get in contact with Warren Factor,

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

New laws from the Kinneset make it a great time to buy and sell real estate in Israel

Several new tax laws were approved by the Kinneset that improve the real estate market for home buyers and sellers. First-time home buyers will now have an exemption from the purchase tax for the first 1.35M NIS of the purchase price. After that, the purchase tax will be 3.5% on the portion between 1.35M and 1.6M NIS, and 5% on the portion of the purchase price over 1.6M NIS.

Good news for sellers is the changes in calculation for the improvement tax. The improvement tax applies to capital gains that occurs when selling property that has appreciated. One no longer needs to wait 4 years from the time of purchase before selling in order to avoid the tax. One may sell 2 apartments and receive full exemption from the tax if the price of each apartment does not exceed 2,200,000 NIS.