Regulatory Alerts2025-04-06
Revision of Directive 203 on Credit Risk Standardized Approach and Directive 329 on Housing Loan Limitations
The Bank of Israel's Banking Supervision Department has issued temporary amendments to Directive 203 and Directive 329 to mitigate rising credit risks in the construction and real estate sectors. The revisions impose a 150 percent risk weight on project finance for residential developments where over 25 percent of sales involve deferred payments exceeding 40 percent of the price, and cap developer-subsidized bullet and balloon loans at 10 percent of quarterly housing loan executions. These measures, effective until December 31, 2026, aim to address elevated risks associated with non-linear payment structures and subsidized loan products driven by recent developer promotional campaigns.
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