Thursday, January 6, 2011
Home prices not cooling off anytime soon
Bank Leumi says that sales of privately-built new homes rose in October and November 2010, after slowing somewhat during the third quarter. New home sales rose 8.3% in January-November, compared with the corresponding period in 2009.
The bank says that one of the factors driving new home sales is low mortgage interest rates. The average interest rate on CPI-linked mortgages is a low rate of 2.2%. The average interest rate on five-year mortgages is 2.05%, and the average interest rate on 20-year mortgages is 3.16%. Bank Leumi says that, for now at least, it seems that Supervisor of Banks Rony Hizkiyahu's efforts to make mortgages more expensive are not working. Furthermore, the drop in the average interest rate on CPI-linked mortgages has been paralleled by an increase in the annualized pace of credit for housing.