During the period, the Bank of Israel cut the interest rate from 3.25% in September 2011 to 2.5% in February 2012. Macroeconomists expect the Bank of Israel to keep the interest rate at this level for several months, and to begin raising it toward the end of the year. The biggest increase in new mortgages in March was in variable interest mortgages, both linked to the Consumer Price Index (CPI) and unlinked, which rose by 13.7% to NIS 2.55 billion in March from NIS 2.24 billion in February. New fixed-interest mortgages rose to NIS 872 million in March from NIS 750 million in February.
The Bank of Israel has said in the past few months that the interest rate cuts would not reinflate the mortgage market, because of the macro-prudential measures taken to restrict lending would counter the rate cuts. However, the minutes of the monetary council for the April interest rate decision indicate that the Bank of Israel is again considering intervening in the mortgage market.