So are many households that are below the sixth decile, in a situation where spending exceeds income. This means that a large part of the public increases his bank’s minus and credit (if the bank allows).
Following the crisis, the Bank of Israel released a list of easements designed to allow breathing space for people who are in a state of distress these days. One is the possibility for a bank to increase the credit limit unilaterally under the same conditions as the existing one.
So that’s what is funny (or rather sad to say) is that credit grows for those who don’t. Not only that, the Bank is initiating its best and most robust clients to expand their framework (probably for protocol with the Bank of Israel).
Apparently, the good customers of the banks received a text message on one side informing them that their credit line was growing (what do customers care … whatever …).
What about those who seek and need credit increase?
Those who have sought to increase credit and have been rejected by the banks are actually the ones who now need the framework increase more than anything.
The applications of the applicants are examined according to the totality of the account data and in the Bank’s business discretion only without any emotional, political or patriotic consideration – the only consideration of the Bank is not to take risks! This is the slogan of banks today as in every day (except associates).
Even those who were considered good customers, but who became risk-averse (due to the age or business that might be a slap in the situation), for the first time in their lives had a tough reaction and a cold shoulder of the bank … With the change of status so the attitude and attitude change.
Interest rates rise:
In a review by the Bank of Israel a week ago, it was reported that interest rates on loans rose 0.5% to 0.7% and are expected to continue to rise – as a result of rising interest rates in the capital market as well as an increase in the risk premium in the economy …. But this is a very small trouble –
Distressed customers who want to increase their credit for fear that they might be in a serious financial problem are asked to pay even higher interest rates on the minus and have to apply to non-bank credit institutions and take out double-digit interest loans.
Families that have reached their credit limit and do not have other resources to meet for the Passover holiday are leading them to make moves that will hurt their financial future – such as repaying education funds, taking out loans that will burden household spending, and more.
But for them, well … what about the families who don’t have the savings or funds they can repay?
They will be forced to take high interest credit and double interest rates will also be taken. For them the way to a short deterioration.
The position of the banks:
Officially, the banks claim that the trend is to help customers as much as possible – but each case is examined on its merits and a framework extension to a customer who is unable to meet the refund will be approved. Although a large number of customers are currently in crisis, it is assumed that the crisis is temporary and the Bank’s examination of risk management is the ability of the client to repay its debts in the future.
In one of the banks we noted that even in cases where the client does not approve of an increase in the framework, they can offer a bridging loan for several months, even though the interest rate may be high – ie the distressed state and the banks make a coupon!
Deferral of Mortgages and Loans:
A significant relief that banks have declared is the deferral of mortgage payments for up to four months. Some banks have also created an online form that allows a convenient application for deferral of mortgage payments in three or four months. The repayment does not result in the repayment of the mortgage repayment – the deferred amounts are charged to the balance of the debt. But the frozen amount spread over a period of years and that too can help.
There are also cases where the banks do not approve the mortgage deferral. For example, if there was a loan arrears at the time of the rejection request, if there was a previous payment freeze or if the mortgage had four or less payments remaining.
Those who take on non-housing loans, such as households and small businesses, appeal to the banks to postpone the loan payments for several months, but approval of the repayment of the loan repayments is somewhat problematic. The bank will only approve the rejection if it assumes that the customer has a future repayment capability.
In these cases, when the repayment is approved, some banks allow customers to choose whether to extend the respective loan term so that the monthly repayment does not increase, or increase the repayment and leave the loan on hold, as is the case with mortgages. In some banks when the repayment is rejected, the loan duration is also automatically rejected.
So as we said, there are patriotic statements by the government and promises to help with the banks, but apparently the banks’ management has a different obligation and is the last line of profit in the annual report.
