Hapoalim to absorb next rate hike for mortgage customers

Bank Hapoalim announced this morning that it would try to help customers cope with the mortgage repayments following interest rate hikes by the Bank of Israel, and that it would absorb the next hike, expected to be declared tomorrow.

The bank says that monthly repayments by eligible customers will not be affected by any interest rate rise, and the prime rate on which the interest on variable-rate loans is based will be kept at 4.75% for the time being, regardless of how large a rate increase the Bank of Israel decides upon tomorrow.

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The measure will be in force for a year for over ten thousand customers with existing mortgages at Bank Hapoalim that include a prime-based component (and will apply to that component only) who meet the following criteria: existing customers with one property mortgaged to the bank; the mortgage is for over 60% of the value of the property; the monthly repayment was under NIS 5,000 in April 2022, before interest rates started to rise; the total monthly repayment has risen since April by more than NIS 400; and loan repayments are not in arrears.

For customers meeting these criteria, the change will be applied automatically, and they will be notified by the bank.

Bank Hapoalim CEO Dov Kotler said, “We have decided to freeze the rise in interest payments for over ten thousand customers who we calculate have sustained the largest rise in repayments in the past few months. We are attentive to the difficulties in which our customers find themselves, and we are proud to be the first bank to announce such a move.”

The bank has made clear that if there are further interest rate rises during 2023 besides the one expected tomorrow, they will apply to monthly mortgage repayments. It also says that if during this period interest rates fall by more than the benefit just announced, the monthly repayment will be adjusted for the reduction, on the basis of the interest rate mechanism in the loan agreement.

At the end of the benefit period, from January 1, 2024, monthly repayments on the prime-based track will bear rates of interest applicable at the time, in accordance with the loan agreement.

Published by Globes, Israel business news – en.globes.co.il – on January 1, 2023.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.