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    • CEO of the Bank of Jerusalem: “The duration of mortgage loans should be extended to 35 years
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    CEO of the Bank of Jerusalem: “The duration of mortgage loans should be extended to 35 years

    Pabio Posted on

    “I have no doubt that once the war is over, we will enter a period of recovery and reconstruction, particularly in northern Israel and near the border with Gaza. Real estate and infrastructure markets will play a key role in enabling urban renewal and growth, creating contingencies. opportunities to attract quality populations to Israel’s borders and facilitate comprehensive infrastructure modernization,” Yair Kaplan, CEO of the Bank of Jerusalem, announced at the bank’s annual conference celebrating 30 years of its real estate sector The event brought together senior figures from the real estate sector.

    “At the Bank of Jerusalem, we have specialized in real estate for over 60 years. Today, we manage around 250 projects across Israel, financing around 12,000 housing units,” Kaplan said. He highlighted the scale of the sector’s operations, which amount to around 12 billion shekels, a significant figure even by big bank standards, thanks to the bank’s unique collaborations with most insurance companies in Israel. .

    To illustrate the bank’s accessible and efficient services, Kaplan highlighted the dedication and care of its staff. He shared a story from September at the Entrepreneurs Association conference in Eilat, where Ofer Rofa, head of the real estate sector, received calls from developers not attending the conference and provided solutions for their projects with the bank, even at 11 p.m.

    “We always try to think outside the box. It is no coincidence that the Bank of Jerusalem was a pioneer in financing urban renewal projects in Israel, expanding its credit solutions to include mezzanine loans and top-ups of equity – characteristics more commonly associated with private debt funds than banks,” he said.

    Kaplan also noted that many Israeli cities are expected to undergo urban renewal processes, supported by local authorities and the Israeli government. “The Bank of Jerusalem places great importance on this area and plans to expand its credit portfolio and market share in this area,” Kaplan said.

    How to manage loans to entrepreneurs?

    Kaplan referred to a meeting organized by the Bank of Israel with the heads of commercial divisions of various banks. “The central bank has expressed concerns about risks associated with the entrepreneur lending model and the 20-80 payment structure, such as the inability to finalize apartment purchases on time, recession scenarios that could complicate mortgage refinancing in the future and unsold housing inventory This method of financing also increases credit requirements and financing costs for developers, requiring increased attention to demand risk management and flow. project cash flow.

    Kaplan continued: “Our preliminary findings are that contractors offering loans should avoid financing buyer down payments, judiciously manage non-linear sales within approved credit frameworks and, of course, notify us when project credit needs increase so that we can prepare accordingly. “

    “On the other hand, there is no doubt that non-linear sales trends also arise from real difficulties buyers face in raising the required equity or managing high mortgage costs,” he pointed out. . the average monthly mortgage payment of around NIS 1,000, while property prices have increased by around 6% since the start of the year.

    “That is why,” concludes Kaplan, “I asked the Bank of Israel to extend the term of mortgage loans from 30 to 35 years, as is common in many countries, and to increase the financing rate purchases beyond 75%, as has been successfully implemented in the “Buyer’s Price” Program.

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