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Israel delays bill to freeze mortgage rates for first-time buyers

February 12, 2023 at 1:07 pm

Bezalel Smotrich on 10 May 2021 [GIL COHEN-MAGEN/AFP/Getty Images]

Israel will delay passing a new law that would freeze mortgage rates for first-time home buyers, Finance Minister Bezalel Smotrich said on Sunday, as the proposed legislation faces opposition from the country’s central bank.

Smotrich and the head of parliament’s finance committee, Moshe Gafni, said in a joint statement they would hold off for a week to allow a “professional discussion” to find a solution for households whose monthly mortgage repayments have jumped in line with steep interest rates hikes over the past year.

Gafni and Smotrich said they would meet with the banking regulator, which is part of the central bank, to come up with a solution for mortgage holders.

In a bid to curb inflation that has topped 5%, the Bank of Israel raised its benchmark rate from 0.1% last April to 3.75% currently, exacerbating already high living costs for mortgage holders. The benchmark interest rate is expected to soon reach at least 4%.

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Gafni for months has promoted a bill to protect some mortgage holders from higher rates to help ease the financial burden.

Last week, he said he planned to bring the bill to the government’s ministerial legislation committee on Sunday. It needs to be cleared by the committee before it can be debated in parliament.

Bank of Israel Governor Amir Yaron has criticised the plan, saying it would backfire without lowering costs while hurting Israel’s free market credentials.