Banks granted NIS 3.4 billion in new mortgages in March 2012, 14.4 percent more than the NIS 3b. granted in both February and January, the Bank of Israel reported Tuesday.

The amount of new mortgages in March was 44% higher than the low point of NIS 2.3b. last October, three months after the Bank of Israel tightened mortgage terms, capping the variable-interest component of a mortgage to one-third of the total. The total of variable-interest mortgages rose 42% in the October-March period, although their proportion of total mortgages fell from 75.8% to 74.5%.

During the period, the Bank of Israel cut the interest rate from 3.25% in September to 2.5% in February. Many economists expect the central bank to keep the interest rate at this level for several months and to begin raising it toward the end of the year.

The biggest increase in new mortgages in March was in variable-interest mortgages, both linked to the Consumer Price Index and unlinked, which rose 13.7% to NIS 2.55b. in March from NIS 2.24b. in February. New fixed-interest mortgages rose to NIS 872 million in March from NIS 750m. in February.

The Bank of Israel has said the interest-rate cuts would not reinflate the mortgage market because macro-prudential measures taken to restrict lending would counter the rate cuts. However, the minutes of the central bank’s monetary council for the April interest-rate decision indicate that it is again considering intervening in the mortgage market.

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