MK Rabbi Gafni Brings Good News for Mortgage Holders

Chairman of the Knesset’s Finance Committee MK Rabbi Moshe Gafni on Monday ordered the committee’s legal advisor to initiate a committee bill that would freeze interest on mortgages even when interest rates in the economy continue to rise. The words were said at today’s special meeting hosted by the governor of the Bank of Israel, Amir Yaron, who gave the members of the Knesset an overview of the state of the Israeli economy.

In his words, Rabbi Gafni criticized the interest rate increase policy pursued by Governor Yaron and the Bank of Israel: “The frequent increase in interest rates creates an increase in the cost of living,” Rabbi Gafni said and added: “We are concerned that the cost of living is not at the top of the social order of the state’s economic advisor, which is the governor of the Bank of Israel.”

Later, Rabbi Gafni said that “when the Bank of Israel decides to raise the interest rate, the interest rate on the mortgages goes up anyway and thus the cost of living, in the eyes of those who are not the Bank of Israel, it seems as if it spurs the cost of living.”

The governor responded to the claims and explained why raising the interest rate is critical for the Bank of Israel in order to lower inflation: “We must understand, if we don’t eradicate inflation and it is fixed at 5%, people will start thinking about it, and then it comes on the side of the producers and consumers, and then inflation spirals are starting.” He also referred to the burden on mortgage holders: “We are aware of the pain, we include all the data, the mortgages, and we are aware of it, but at the same time we must understand that if we do not eradicate inflation, it will be fixed at 5%.“

The bank governor also referred to the expected wage increase in the public sector and said, “We are on the verge of renewing wage agreements in the public sector, after a gap that has opened up from the private sector, compared to a more moderate increase in the public sector. The wage agreements will cover 20-22, and most likely several years to come.”

Yaron concluded by saying: “It is important that the wage agreements do not include too great an expansion, both in the retroactive compensation component and in the salary base for the following years. The literature shows a connection between wages and inflation, and it is important that the wage agreements do not include a significant expansion for the coming year. We want to do this with no sense.”