Leumi clamps down on loans for contractors’ offers

After a period in which it targeted the mortgage market and increased its market share to 30%, Bank Leumi (level: roomThe Bank of Israel appears to be the first Israeli bank to clamp down on building contractors’ bids that have fueled the real estate market in recent months. A recent internal directive issued by the bank states that in a contractor deal, 20% of the capital will now be required from the client, and the contractor’s senior loan will be limited to up to 40% of the value of the apartment. Globes has learned that customers with existing initial approval will not be subject to the new restrictions.

This measure would undermine many contractor deals currently being completed, which requires only 10% of the capital from buyers and sometimes less than that, in many cases, in exchange for the contractor’s loan. Market sources believe that following Bank Leumi’s move, other banks will take similar measures, as part of efforts led by the Bank of Israel to “calm down” the increase in the level of contractor loans out of the total number of new loans obtained in the year. Housing market.

Bank Leumi said: “Bank Leumi always sets the terms of each deal in a professional manner while carefully managing risks and paying attention to the details of each deal and each developer, focusing on the Bank of Israel’s guidelines in this regard.”

It should be noted that Bank Leumi itself, with regard to contractor loans, was keen to implement only 80/20 (20% of capital) over the past year. In other words, the bank was careful not to allow its contractors to agree to more “generous” 90/10 transactions. Leumi insists that it is keen to follow the instructions of the Bank of Israel regarding the conditions required to support projects.

Published by Globes, Israel Business News – en.globes.co.il – on November 13, 2024.

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