Limitations On Issuing Housing Loans

Bank of Israel
Banking Supervision Department
Policy and Regulation Division
January 25, 2015
Circular Number C-06-2455
To:
The banking corporations—attn: CEO
Issue: Limitations on Issuing Housing Loans (Proper Conduct of Banking Business Directive 329) Introduction

1. In light of accumulated experience, as well as enquiries from banking corporations,
   the need has arisen to update the Directive in several areas. In parallel with the publication of this Circular, we are also publishing an update to the Frequently Asked Questions file dealing with Directive 329.
2. Following consultations with the Advisory Committee on Banking Business, and with
   the approval of the Governor, I have set out the revision of the directive as follows. Amendments to directive
3. Section 1—Definitions
   In the definitions of “Sole dwelling” and “Replacement dwelling”, the reference to the Land Taxation Law has been updated, to prevent a lack of correlation between the definitions in Directive 329 and the definition in the law.
4. Appendix A-Section 1.3 in the definition of payment to income ratio- recognition
   of a relative’s income
   Section 1.3 in the definition of payment to income ratio was revised, in order to
   clarify the following two issues:
   4.1 Not more than half of the monthly disposable income of a relative that is not
   purchasing a right in the land, even if the relative signs as a borrower on the loan agreement, may be recognized.
   4.2 The full monthly disposable income of the borrower’s spouse may be recognized,
   if said spouse meets all the conditions set in Section 1.3 of the definition, and resides with the borrower in the dwelling.

Bank of Israel
Banking Supervision Department
Policy and Regulation Division
Effective date
5. The effective date of the revisions is the publication date of this circular.
File update
6. Update pages for the Proper Conduct of Banking Business Directives file are
attached. The following are the update instructions:
Remove page 329-1-7 (9/14) [2]
Insert page 329-1-7 (1/15) [3]
Sincerely,
David Zaken
Supervisor of Banks