Israel delays bill to freeze mortgage rates

Reuters/Ronen Zvulun

Israel will delay passing a law that would freeze mortgage rates for first-time home buyers, said finance minister Bezalel Smotrich, as the proposal faces opposition from the country’s central bank.

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

Gafni and Smotrich said they would meet 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 percent, the Bank of Israel has raised its benchmark rate to 3.75 percent from 0.1 percent last April, exacerbating already high living costs. The benchmark interest rate is expected to hit 4 percent soon.

Gafni has been promoting a bill over the past few months to protect some borrowers from higher rates.

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 not lower costs but would hurt Israel’s free market credentials.