BoI exempts foreigners from mortgage restrictions

Bank of Israel Governor Stanley Fischer declares the residents who are not Israeli citizens will not be subject to new restrictions on variable-rate mortgages.

By OMER RABIN / GLOBES
May 5, 2011 22:46
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construction tel aviv 311. (photo credit: Ariel Jerozolimski)

 
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The new restrictions by the Bank of Israel limiting variable- rate mortgages to onethird of the total mortgage came into effect Thursday morning. However, on Wednesday the central bank published a document entitled “Variable Interest on Home Loans,” which revealed that foreign residents will be exempt from the new regulations.

Most of the principles in the document are no surprise and were set out last week by Bank of Israel Governor Stanley Fischer. But the document clearly states that regarding home loans taken by foreign residents in a foreign currency, the loan taker can freely decide the level of variable interest contained within the loan.


The new mortgage directive also exempts bridge loans in which the period of the original repayment is up to three years on multipurpose loans of up to NIS 100,000. This is on condition that the bank retains the difference of less than 33.3 percent between the variable-rate loan and the overall loan on the home.

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