Regulatory Alerts2014-07-15
Added
Limitations in issuing housing loans
The Bank of Israel promulgates Proper Conduct of Banking Business Directive 329, which consolidates previous supervisory letters into a single binding document governing limitations on housing loans, including restrictions on loan-to-value ratios, variable-rate portions, payment-to-income ratios, and maximum repayment periods. The Directive redefines the term "payment to income ratio" and restricts the loan amount eligible for reduced risk weight under Directive 203 to NIS 5 million, requiring loans exceeding this threshold to be weighted at 100 percent. These amendments apply to housing loans approved in principle no later than October 1, 2014, with specific transitional provisions allowing loans to proceed if a letter of commitment and land purchase contract were signed before that date and the loan agreement is signed by December 1, 2014.
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