Bank of Israel defers loan returns until end of year

Borrowers can delay payments until end of 2020 as pandemic wreaks havoc on economy; however, postponement will have additional costs

View of the Bank of Israel in Jerusalem, February 25, 2015. (Nati Shohat/FLASH90)
View of the Bank of Israel in Jerusalem, February 25, 2015. (Nati Shohat/FLASH90)

The Bank of Israel announced Tuesday that all Israelis who have taken mortgage and credit loans will be able to delay the return payments until the end of the year.

It was the third time such an announcement was made since the coronavirus pandemic began, and the second in less than two months.

The move, which was coordinated with all of the country’s banks, comes as hundreds of thousands of borrowers have suffered the financial repercussions of the crisis.

However, deferring the payment until next year will add interest to all return payments, totaling thousands of shekels and even more, Hebrew-language media reported.

Between March and mid-September, banks have put off loan returns for 738,000 clients. The total value of their loans stands at some NIS 9.5 billion ($2.75 billion).

According to the Bank of Israel, anyone who has already postponed their payments by six months can postpone them until the end of 2020, meaning a potential total delay of nine months. Those who haven’t delayed the payments can do so now for six months. The banks cannot refuse the delay.

Amir Yaron, governor of the Bank of Israel, attends a press conference in Jerusalem, March 31, 2019. (Yonatan Sindel/Flash90)

“Since the beginning of the crisis, we have taken unprecedented measures to enable the orderly functioning of the economy and the financial markets, alongside continued efforts to advise the government on policy matters,” said Bank of Israel Governor Amir Yaron.

Supervisor of Banks Yair Avidan said that extending a loan would be considered a new loan, which carries additional costs, and urged borrowers to only take advantage of the measure after considering its necessity.

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