In order to deal with the risks derived from growth in the balance of housing credit, the Bank of Israel has for a number of years been placing various limitations on the mortgage market. These are prudential tools that reduce the risk both to the financial system and to borrowers. A few words on the long term.
Meanwhile, because the transition of the supply system has not been sufficiently progressing, there remains a substantial supply capacity for the old-type demand. Therefore, the output gap with respect to the old-type demand is in the state of excess supply, and firms have no choice but to reduce the prices of their products and services.