Regulatory Alerts2021-12-27
Limitations on Issuing Housing Loans
The Supervisor of Banks issued Directive 10 to impose strict limits on housing loans issued by banking corporations in Israel to ensure prudent lending practices. The regulation establishes maximum Loan-to-Value ratios of 75 percent for sole dwellings, 70 percent for replacement dwellings, and 50 percent for investment dwellings, while capping the payment-to-income ratio at 50 percent and the variable rate portion at 66.66 percent. Additionally, the directive mandates a maximum repayment term of 30 years, requires specific documentation for certain loan types, and introduces higher risk weights and capital requirements for leveraged or high-risk housing credit portfolios.
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