Israel may ban banks from raising rates
2022.12.12 06:58
Israel may ban banks from raising rates
Budrigannews.com – On Monday, the head of Israel’s powerful parliamentary finance committee presented a bill that would restrict banks’ ability to raise mortgage rates in response to increases in the interest rates set by the central bank.
Since April, the Bank of Israel’s benchmark interest rate has increased by 3.15 percentage points to 3.25 percent, with additional increases likely. In addition to high inflation, mortgage payments have increased by more than 291 shekels per month.
The Knesset Finance Committee chairman Moshe Gafni’s bill stated, “To ease the financial burden, it is proposed that the interest rate set in a housing loan for the purchase of a single apartment used for living not change.”
“And the bank will be allowed to raise the interest rate on the loan at half the rate in order to ease the borrowers’ financial burden if it is decided to raise the interest rate at an annual rate exceeding at least 1%.”
The new law, if ratified, would apply to new loans and take effect on the first of the following month. Gafni’s Unified Torah Judaism party is in the approaching moderate alliance administration of Top state leader assign Benjamin Netanyahu.
The aggressive increases in interest rates are intended to combat inflation that has exceeded 5%, thereby increasing already high living costs.
Amir Yaron, governor of the Bank of Israel, has urged lawmakers not to interfere in monetary policy decisions, stating that the “magic solutions” they proposed to mitigate the effects of interest rate increases would harm the economy’s weakest sectors.
He asserted that any legislation to circumvent the higher rates would expose banks to risks.
Bezalel Smotrich, who is considered to be Netanyahu’s finance minister, also caused a stir last week when he said that his economic strategy would incorporate religious beliefs outlined in the Torah and that doing so would help the country prosper.
