Due to the closure of the second corona, the Bank of Israel and the banks are again publishing a new voluntary outline for deferring loan repayments. This is a kind of continuation of the financial soul for customers who can not meet the terms of their loans by providing a period of time for financial reorganization. The new outline extends the period during which banks can be asked to postpone loan repayments by several months from the end of October to the end of December this year, while expanding the possibilities of deferring repayments on non-housing consumer loans.
According to the Central Bank’s announcement from today, “Customers who have postponed payments for a period of up to 6 months will be able to receive an additional postponement until December 31 (and in fact reach a cumulative postponement of up to 9 months)”, while customers who have not postponed payments and now want to postpone Of up to 6 months “. The Supervisor of Banks clarifies that “the deferral without the bank’s discretion is of the principal component of the loan” and that “the bank may also allow a deferral of interest in addition to the deferral of the principal.”
With regard to mortgages and business credit, the existing outline conditions will continue to be met, so that those who have not taken full advantage of the deferral period can apply to do so until the end of the year.
Deferrals were made on 798,577 loans
Following a number of individual banks’ initiatives to defer loan repayments, in early May the first outline of the Banking Supervision was adopted by all banks, to defer mortgage payments, all-purpose (and non-housing) consumer loans and business loans. In mid-July the outline was extended and expanded, due to the recognition that the corona crisis had significantly affected a very wide population. Since the beginning of an agreed-upon plan to defer repayments, payments have been deferred in 738,577 loans, in the framework of which repayments of more than NIS 9.5 billion have been deferred.
According to data from the Bank of Israel, the populations that have made the most use of the option to defer repayments are mortgage borrowers, small businesses and private borrowers in non-housing loans. The Bank of Israel now clarifies that “the government’s decision to impose another closure in order to deal with the corona plague leads to various consequences for customers of the banking system. In order to help customers deal with the consequences of the closure The banks on further expansion of the outline. “
Deferring loan payments is the same as new credit. That is, deferring loan repayments has actual costs to the borrower and although they are made without commission, they increase the monthly repayment on housing loans (in order to repay the bank by increasing the regular monthly payment) or extend the loan period until repayment is repaid on time (including interest on This period). Thus, the repayments are not canceled but only deferred, even though it is done at the original interest rate of the loan and not at a new interest rate.
According to the Governor of the Bank of Israel, Prof. Amir Yaron, “since the beginning of the crisis, we have been operating with methods and tools that have never been used to enable the normal operation of the economy and financial markets.”
The Supervisor of Banks, Yair Avidan, states that “the additional extension of the outline is intended to give additional ‘breathing space’ to customers who have encountered additional difficulties following the continuation of the crisis and its consequences.” He added that “the deferral of payments will not be allowed for an indefinite period, and therefore we must act resolutely in order to reach payment and repayment arrangements, which match the capabilities of customers with regard to the challenges of the period.”
The Supervisor refers to the concern that although such outlines help certain borrowers, who can organize themselves to meet repayments even though their income has been damaged due to the corona crisis, they also delay the end and allow escape from dealing with the full consequences of the crisis.
In any case, while all the banks agreed to lend a hand and allow customers to defer repayments, the credit card companies chose not to take part in the plans and did not commit like them to allow loan deferrals to be deferred. As far as is known, the Bank of Israel offered the three credit card companies to join the outline, but they chose not to do so for their own reasons.
*The article has been translated based on the content of Source link by https://www.globes.co.il/news/article.aspx?did=1001343907
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