construction tel aviv 311.
(photo credit: Ariel Jerozolimski)
Israel Discount Bank subsidiary Discount Mortgage Bank Ltd. published its financial report for the second quarter of 2011 on Thursday. Israel’s fourthlargest mortgage bank, with an 8 percent market share, has a credit portfolio of NIS 17.2 billion, 5% more than at the end of 2010. New credit in the first half fell to NIS 1.9b. from NIS 2b. in the corresponding half.
Although the financial report covers the first half of the year, Discount Mortgage Bank CEO Etti Langerman said he was more worried about the current situation.
“The market is going down,” she told Globes. “We’re feeling this much more in August than in July. Leads – i.e., new people interested in mortgages – have fallen 30% in August. We’re feeling a complete stop throughout the market.
People who were already in the loan process are now sitting on the fence.”
Globes: Why is this happening? Langerman: “The social unrest is having
an effect. People are waiting to see where things are headed and the
decisions that the government will have to take.”
What will happen if home prices fall? Langerman: “A fall in home prices
will affect people’s sense of wealth, but not a person who owns an
apartment and lives in it. The important thing is the ability to repay
the mortgage. At the current unemployment rate, there is good repayment
ability, and there is no economic problem. If there is a slowdown and a
rise in unemployment, that will affect the public. I want to emphasize
that, at the moment, we don’t see a worsening in the parameters, and
there is no increase in standing orders not being honored.”
Discount Mortgage Bank’s net profit rose to NIS 11.4 million for the
second quarter, from NIS 9.8m. for the corresponding quarter last year.
First-half net profit rose 27% to NIS 20.3m. from the corresponding half
last year. The financing spread rose 19% to NIS 68m.
In compliance with the Bank of Israel’s disclosure requirements,
Discount Mortgage Bank detailed its mortgage-credit structure. The
figures show that the average mortgage rose from NIS 673,000 in 2010 to
NIS 685,000 in the first half of 2011. The average loan-to-value (LTV)
ratio was 60%. Twenty-one percent of loans have an LTV of 60-75%, and
12% of loans (NIS 202m.) have an LTV of more than 75%. Most loans with
an LTV of more than 75% were granted with the help of mortgage insurer
The repayment-ability item (the ratio between the monthly repayment on a
loan and the mortgage holder’s disposable income) was up to 30% on
69.3% of loans granted since 2008. The ratio was 30%-40% on 18.7% of
loans, and it was more than 40% on 12% of loans.