Consumer Price Index (CPI) linked mortgage interest rates rose for the seventh consecutive month in May 2011, reaching an average of 2.72%, up from 2.59% in May, the Bank of Israel reports. Mortgage interest rates are rising in line with the rise in the interest rate and Bank of Israel measures to restrict variable interest mortgages.
The average mortgage interest rate for 20-year CPI-linked mortgages rose to 3.8% in May from 3.64% in April and from 3.16% in December 2010. The average mortgage interest rate for 17-20 year CPI-linked mortgages rose to 3.55% in May from 3.39% in April, and the average mortgage interest rate for 5-12 year CPI-linked mortgages rose to 2.56% from 2.84%, respectively.
The Bank of Israel's measure to limit variable interest mortgages to a third of the total mortgage came into effect at the beginning of May. The measure aims to reduce the level of debt in the mortgage market and slow the rise in home prices, which began four years ago. Next month's mortgage rates figures may provide some indication about the effectiveness of the directive
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