We’re expecting to see a huge and worrying increase in the number of Israelis, singles and families, that can’t meet their monthly repayments on their loans
A household lending revolution in Israel began this weekend with the launch of the country’s first credit database. Supporters are hailing the database as a way of lowering the cost of borrowing for consumers, while critics warn it may tempt many households to take out loans they can’t afford.
Formally launched on Friday, the database – or “system” as the Bank of Israel calls it, apparently out of the negative connotations with respect to privacy that official databases have – collects information about the financial activity of almost every household in Israel.
The Bank of Israel and the new system’s other supporters are hoping to see a cut in borrowing costs for people with a strong credit history – albeit at the cost of higher interest rates for those who do not have good credit histories. It will also enable them to shop around between bank and non-bank lenders to get the best loan because all lenders will have access to the same credit information and can properly price a loan.
Critics are focused on the risk that lower income borrowers will be lured into taking loans they can’t afford.“We’re expecting to see a huge and worrying increase in the number of Israelis, singles and families, that can’t meet their monthly repayments on their loans,” says YEDID.