Globes: More mortage borrowers in arrears in Israel than in Europe

More mortage borrowers in arrears in Israel than in Europe

Don't panic.
There is no looming mortgage crisis in Israel.

I haven't seen the actual research. Not to doubt anyone's professionalism, but with more than a little professional statistics work under my belt, I can promise you that those numbers stink of inaccuracy.

Reading between the lines of the report here is what we get:
Many people are behind on their payments.
Most of those people are "new immigrants".
Most of those people have loans greater than 80% of the value of their home.

One thing I can promise you: None of these were clients of Krantz-Vered Finance. Our clients get programs that are flexible in times both good and bad so that such unfortunate situations don't occur. In addition, we don't let them take out that kind of financing to begin with.

Instead of concentrating on "the best rate" we concentrate on "what is best for the individual client". Any idiot can go to the banks to see which will give him "the best rate". Only Israeli Mortgage Professionals will get you the mortgage that fit your family's needs.

beware the amateurs

Beware the Amateurs

ISRAELI MORTGAGE SURPRISES & PROMISES BROKEN

My heart goes out to this guy. He wanted to buy a house and move to Tzfat.
Things can go wrong.
Mortgage Israel

Look at his site, it tells the story far better than I could.

Honest Mortgage Agents in Israel

Posted by Israel Mortgage Blog at 10:00  

 

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Ariel Vered

telephone: 072.232.2050
mobile:      054.251.6263
ariel@veredfamily.net

read my blog:
http://israelimortgages.blogspot.com/

 

הידד בנק ישראל!

- ריבית בנק ישראל לחודש דצמבר 2007

Bank of Israel didn't cave into the pressure. The dollar is too low, inflation is too low, and Bank of Israel made the tremendously difficult decision to do nothing.

The banks have been very iffy for the past few weeks. This should reassure them and be good news for our clients. The base interest rate remains 4%. The prime rate remains 4.5%. These are good, affordable levels that are good for the economy, and allow businesses, consumers and even banks to prosper.

Israeli Mortgage Advice

blog - 028 - Beware the sharks.doc

this is a really good one that I wrote

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Beware the sharks

 

In the past few months we've heard about problems at the biggest names in international banking writing off losses because of the presumed credit crisis as a result of failures in the sub-prime market in the US.

 

HSBC is writing off $2.3B, UBS $3.3B, Goldman Sachs $2.8B, Citigroup $64B. Yesterday Barclays joined the fun with a $2.7B write-off.

Mortgage Israel

Now we have news that our good friend Bank Hapoalim might also have to write off some debt. They've been claiming that they have no exposure, but now it appears that they will be writing off around $100M. Citigroup might not bother reporting such an amount, but for our little market it is a lot.

 

As a result, Poalim's stock price has sunk and it is now valued at less than Bank Leumi. Be on the lookout for increased competition between the banks and soon there we should be seeing a lot of attractive new programs for homeowners. I sense a new wave of Israeli refis coming on.

 

[Interestingly, I wrote an article about this subject for an Israeli "English language financial journal" and the clueless editor thought that it had nothing to do with the Israeli market. What an idiot. The guy understands nothing about finance but thinks that he can edit a financial newspaper. I don't know if they're out of business yet or not, but I sure hope so.]

 

I smell sharks in the water. There are banks jumping on the write-off bandwagon to artificially deflate their stock prices. The managers get options and then cash in on them next year when they report huge increases in profits. It's all on paper, they didn't really lose money now, and they won't really earn it back next year. They just write off huge amounts and then come back next year and say that it wasn't as bad as they thought.

 

[If you are interested in a detailed, academic explanation of why this "crisis" is mainly hot air, read here.]

 

Yes, a few of the worst loans in the States will fail. In Israel no loans will fail because of this, but the banks are invested in American funds which might suffer so they might suffer a little. The price of Poalim's stock is being artificially depressed now, and later it will be artificially inflated. Other big players did this trick with the dollar three moths ago when they artificially inflated the price, sold off, and then let the dollar return to a normal rate.

Best Israeli Mortgages

Please note that I am not suggesting that you run out and buy Poalim stock. I am not a qualified stock investor. I am an economist who looks at economic information. Stock advisors throw darts at a dartboard and try to guess what the sharks will do.

 

Israeli Mortgages

 

Israeli Mortgages sure look good

Israeli Mortgages sure look good.

I have heard many complaints about Israeli mortgages from various Anglos. Most of them are way off.

I used to be an American mortgage broker, so I still occasionally get product announcements. Take a look at this one:

We know business is slowing down and it's getting harder to close loans.

Let GMC Mortgage Capital be your OASIS of liquidity in these arid times...

Check out our amazing RESIDENTIAL and COMMERCIAL programs !!

	RESIDENTIAL
Mid-Credit Score	400 +
LTV	65%
Loan Amounts	$150,000+
Rates	Starting at 10.99%
Loan Type	1/29 or 2/28 ARM - Interest Only first 5 years
Broker Fees	NO restrictions - (up to legal limits)
Doc Type(s)	Stated/Stated, Lite Doc, Full Doc
Timeframe	~7-14 days
State Availability	FLORIDA
	AZ, CA, HI, ID, NV, OR, & UT
Property Type(s)	SFR (1-4 Unit), OO or N/OO
	* Restrictions may apply based on payment history, property location/type and/or doc type

 

If you are unfamiliar with the terms here, it means that you can get a mortgage starting at 11%. They are also willing to lend money to people who "state" their income, it will cost 1-1.5% more. This is for people with very poor credit. The loan is more or a foreclosure trap than a home-equity loan.

Mortgage Israel

Most banks aren't like this, and wouldn't make a loan to anyone with such a low credit score, but they have milder variations of the same programs.

 

In Israel, you can get up to half of your loan amount interest-only, never the whole amount and that not always. You can get nothing without documenting your income, regardless of your ability to pay. The banks have horrible programs that will milk you, but there are only a handful of foreclosures each year. It is essential to secure the services of an Israeli Mortgage Expert, but you can be secure in the knowledge that the banks will not give you a loan that you can't repay.

 

Better Mortgages in Israel

מומחי משכנתא

 

 

Why is everyone talking about the Dollar?

Why is everyone talking about the Dollar?

 

This question is only half rhetorical. Everyone in Israeli real estate speaks about the dollar (US) because more often than not real estate here is traded in dollars. (A few months ago I explained that a portion of the rising real estate values in Israel is the weak dollar. The market has adjusted to shekels, only it doesn't know it.)

 

OK, so we watch the dollar and love to hate it, and all in all we can do almost nothing about it. Can it help you make money? Maybe it can. We're always thinking about dollar-shekel exchange rates, but banks in Israel also make loans based upon the Euro. Maybe we should ask: how come nobody talks about the Euro?

 

The astute investor can make a fortune by doing a Euro-Dollar play. Even if you don't have suitcases full of money, if you consult with an Israeli mortgage expert, you can make the bank's money work for you instead of you working for the bank's money. You can refinance your home several times to take advantage of the market fluctuations. Your typical mortgage bank manager, to say nothing about the mortgage clerk, won't be able to understand this, so don't waste your time talking to them about it.

 

Let's take a quick historical look at the Euro-Dollar exchange rates:

 

As of today, the Euro is even a little higher than this chart shows, at 1.4234 dollars, its highest rate ever against the dollar. Why is the Euro strong? What industrial advances has Europe brought about in the past four years? Where is the wealth has Europe created to fuel economic growth? Where are Europe's advances in science that promise the next generation of economic growth? They are all non-existent.

Mortgage Israel

 

To put this in layman's language, the Eurotard's have already regulated themselves into stagnation and are about to over-regulate themselves into irrelevancy. Between the greentards and the pinktards and their islamofascist allies, Europe's impending doom has been all but promised. Science has been replaced by voodoo fear-mongers, industry has been replaced by regulations and business has been displaced by the hijab.

 

There is no way that this euro-dollar rate can continue for long. Within three years I expect the dollar to gain strength against the Euro.

 

Can Shlomo mortgage-holder benefit from this? Definitely!

 

We have a few different methods, it will be different for each mortgage-holder. Most of these methods will involve slightly higher payments in for the next few years, while the amount of principal that you owe the banks shrinks like a grape left out in the August sun.

 

מועדים לשמחה

 

Israel Mortgage

משכנתא

interest rises in Israel

move to prime?

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The interest rate in Israel is again at 4% after the Bank of Israel raised its key discount rate yesterday. Read about it here.

I remember one of my first blog posts here I wrote about how amazing it was that the rate went to 4%. Since then, it went down to 3.5% and has now gone back up to 4%. The difference is that the mortgage banks are way ahead of BoI. Then, the benchmark 20-year mortgage (which is bad for most people) was going less than 4%, now it is approaching 5%.

 

For most people, yesterday's action is meaningless to their personal finances. The banks have already raised their mortgage rates, and will probably continue to do so. Prime rate mortgages are now 5.5%, which is probably better for a lot of consumers than the fixed rate-indexed mortgage. Savings will earn a little bit more. The shekel, currently exchanging at 4.16/$ will probably strengthen a little more.

 

Meanwhile, the situation in Bank Discount continues to worsen. We are recommending to all of our clients to mortgage their homes in different banks.

 

The most important thing is to consult an expert Israeli mortgage advisor. Remember, Discount's lies are taking advantage of the classic rate-fixation with the mortgage consumer. Rates are only a small part of the large mortgage picture.

 

Israeli Mortgages

משכנתא

 

Mortgage Israel

בנק משכנתאות

stay away from discount

enjoy.
I posted this today

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Stay away from Discount

See this from YNET:
דיסקונט הבטיח משכנתא זולה אבל לא מצליח לספק אותה -

This is no news for us. Bank Discount has been making promises right and left to people.
Do you know anyone who has actually got one of their promised subsidized mortgages? Neither do we.

We have advised our clients against this program from the beginning. Their so-called subsidy is only 0.3% less than the going rates. Our clients get better rates than this at the real banks when we get them approved anyways.

As I always say, rate is only one parameter of the loan. There are so many other things which are either hidden or not understood which impact mortgages over time. Discount gives you a good rate, but locks you into using their bank for everything at their rates.
Mortgage Israel
Did you compare how much more you will be spending for your banking there? Have you compared the penalties of the mortgages to those of different banks? In general, this is not a bank that I recommend doing business with. Even if they happen to have a good branch that is convenient for you, this is not the place for your mortgage.

Discount is trying to become one of the major banks by offering mortgages as a loss-leader. Loss-leaders are great if you happen to need that particular product. I used to work at a big do-it-yourself homecenter in DC (which was recently reborn as an online tool store; an interesting story about branding and brand retention). Every week we had a different loss-leader. Usually it was something like mulch or manure. Hoping that people coming to buy manure would also buy tools and plants and fertilizer, these staples were sold at a small loss to the store. Some people would wait for the sales and come in early on a Sunday morning and buy 40 sacks of manure!

Many people think that manure and mortgages have a lot in common. If used correctly, both can be used to increase the value of your home. Both start with m. I think that it ends there, but I'll be happy to get comments suggesting more similarities.

מומחה למשכנתאות

I call into question the rationale of a company who treats their most intricate and expensive product as the loss-leader in order to sell their cheaper products. They want to get you hooked on their mortgages so that they can catch you with their expensive consumer credit options.

My assessment is that they are more reminiscent of a drug pusher than lean-mean marketing machine. We will find you better alternatives for your mortgage.

Mortgages in Israel

משכנתא

 

Say little and do even less

Here are another few things that I have been writing

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Say little and do even less

Yesterday Governor Fischer held a press conference.
You can read a summary here:
Central bank: Subprime mortgage crisis does not affect Israeli economy - Haaretz - Israel News

I have written about the subprime lending crisis in the USA since well before it was a crisis. I used to work in that house of cards, and got out shortly before its inevitable collapse.

Throughout the world, this has raised the cost of borrowing. In Israel, we have consistently seen the banks raise interest rates on home loans, despite the fact that the Bank of Israel has raised rates only 0.25%.

In short, Fischer said that he is doing nothing, but everyone should relax, because if anything needs to be done, he will do it. What he means is that our interest rate is still 1.5% less than that of the US, and he can raise that quickly if necessary.

The US is Israel's biggest trading partner, something like 40% of our exports (guestimate). That means that there are significant amounts of money (in terms of Israel's economy) trading hands between the two countries daily, and differences in the interest rate determine where the money will go.

I remain unconvinced by the Gov. Interest rates will rise here in the short-term regardless of what happens.

I'm trying out this digging thing. I don't really understand it, but please digg me anyways. Thanks.

Israeli Mortgage Experts
מומחי משכנתאות

Israeli mortgages

Mortgage Israel

 

Testing some Israeli Mortgage stuff

This is a test of Israeli Mortgages.
I hope that it will work well.

Checking comments

this is for checking comments

more inflation

More bad news on the inflatiion

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The CPI (מדד) was announced last night. This month it was 1.1%.

Last month it was 0.7%.

 

Right now, inflation is on course to reach 3.1% for the year. Since the country's budget is based upon expectations of 2-3% inflation, this means that more serious measures will be taken by Bank of Israel to fight inflation. For the consumer this means that interest rates will rise.

 

The banks have already been raising rates. Even though the Governor of the Bank of Israel has raised rates by only 0.25% over the last two months, the banks have raised interest on mortgages in most programs by over a full point during the same period.

 

Governor Frankel will raise interest rates again. As the banks have already raised their rates, we will probably see less action there. Look for something like a 0.5% rise for the official rates and an additional 0.25% on most mortgage programs.

 

This is good news for people who have savings. If you have savings, it would be best to move them into variable rate schemes now.

 

If you are buying a house and your income is in shekels, it is time to consider options other than the traditional fixed-rate indexed loan.

 

משכנתא

Israeli Mortgages

 

Mortgage Israel

 

 

Even worse then Hefsitba?

In today's NRG:
חפצים ביקרם
There are some cases that are worse than Hefsitba. All of those people will eventually get their properties.

I have said it before, and I will reiterate it now. We recommend that everyone buy properties that are at least 5 years old. Don't believe promises on paper. The so-called "savings" from buying straight from the developer are usually less than the additional costs of your years in limbo.

The CPI will be updated this evening. The consensus is a 0.7% rise. Stay tuned.

Israeli Mortgages
משכנתא

The Shekel Remains undervalued

another back up

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"The shekel remains substantially undervalued, according to our estimates."

 

The quote that titles this entry is according to this Morgan-Stanley opinion. They think that the Shekel continues to be undervalued. They are also quite critical of our low interest rates. I imagine that they are quite pleased with the recent rising rates, though it is not mentioned.

 

Israel continues to increase its exports at the same time when a growing number of foreigners are investing here. The amount of foreign currency entering the country continues to rise. A good deal of private capital is also finding its way to Israel, with many foreigners buying an Israeli home.

 

What does this mean for Shlomo Homeowner? First of all, it probably means that our economy might be a little more stable than those in the media would let on. I am convinced that interest rates will continue to rise over the next year, but I don't think that any economic disaster is impending. Our industry has learned how to diversify, to balance their domestic investment with foreign factories and daughter companies. We should be confident in our present and optimistic of our future. We might see some fluctuations, but our economy is mature and sound.

As I write these lines, the $-₪ rate is 4.33. This doesn't seem to be consistent with the experts' opinion. If the shekel is undervalued, why has it depreciated against the dollar over the past month? Even more importantly, will it go back down? If our economy is as strong as they think, this number will go down.

 

A few months ago, we were urging our customers with $ linked mortgages to refinance into ₪  based alternatives. Those who listened to us reduced their principal, in some cases by 15-20%, and I couldn't be happier for all who did it.

 

I would never base important investment decisions upon what one analyst thinks. However, if what Morgan-Stanley  thinks is true, then those same people could shave off another good portion of their mortgage by replacing their ₪  based mortgage now with one that is $ based. This would be especially true for those who have high inflation expectations.

 

This is not advice. The issues are intricate, and things such as the LIBOR rate also need to be taken into consideration. Consult an Israeli finance expert, as always is the only real advice that I can give.

 

משכנתא

Israeli Mortgages

 

Mortgage Israel

this is for the back up blog

we might try some more video later

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Should I still refinance?

 

Is it still feasible to refinance your home mortgage? For some it will be worthwhile, for others not. As with everything else, this can only be answered on a case-to-case basis by an Israeli mortgage professional.

 

If you have a typical inflation-linked fixed-rate shekel mortgage, you will lose money in most instances. The penalty that you will pay is based upon the average interest rate. This rate is the average of the last three months. Since the rates are rising, this means that you will be paying a penalty to a rate which is lower than what you will now receive.

 

Let's say you have 15 years remaining on a 20-year loan and are paying 5.2% interest. The average rates for a similar loan over the past three months were 3.9, 4.0 and 4.1. If you wanted to refinance that loan right now, you would have to pay the penalty on the difference 5.2-4.0, but only get a 4.1% rate!

 

If you are financially better off now than you were five years ago, and can afford a higher payment, or want to pay off a portion of your loan, there are still some things that can be done, but if you wanted to just earn something off of an improved rate, you have to do it while the rates are falling, and that probably won't occur again for some time.

 

If you have an adjustable rate mortgage, call us as soon as possible. The consensus view is that rates will continue to rise in the foreseeable future, and you need to lock-down your low rate now.

 

משכנתא

Israeli Mortgages

Israel Mortgage

The new welcome message

This is a test of the new welcome message
Israel Mortgage

משכנתא

Second Video Test

This is a test of using you tube to host the video rather than blogger.
I don't know if it makes any difference.



We'll soon find out.

Trying out video

I'm told that video is the greatest.
More people watch a blog than read a blog.

Here is how it is loaded using draft.blogger.com:

testing

This blog is really for testing out some stuff that I will be using.
I would also like to add all sorts of links like Israel Mortgage
and the such.