Demand for new mortgages fell 25% in July 2011 compared with June, says AMG Financial Models Ltd. AMG CEO Amit Kaminsky attributes the drop to the "tent and other protests, and expectations that the prime minister will take measures that will lower prices in the real estate market."
Kaminsky said that these expectations were unrealistic because home prices will not fall in the foreseeable future. "Even if all of the government's measures succeed, the severe and real housing shortage will take years to fix, and only then will we see home prices fall," he said.
AMG says that there is a real hesitancy in taking new mortgages for buying an apartment, especially among young couples buying their first home. Kaminsky says that mortgage banks are focusing on handling buyers who need financing for homes bought in the past few months.
Kaminsky says that the wave of demand for homes, which reached a peak in recent months, caused mortgage banks to adjust accordingly, and they increased the number of personnel handling mortgage applications. "The banks want to maintain the turnover we saw before the wave of protests," he says. "Due to the slowdown in mortgage activity, the banks will now sit on the fence in the short term. This is actually a good time for mortgage holders to refinance to adjust to a rising interest rate environment and the resulting higher monthly payment. It is now possible to obtain better terms, easier payments, and a substantial saving in mortgage costs."
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