More than half of Israeli households go into overdraft, says report
Survey shows 54 percent of households withdrew more than they had in the bank, with 34 percent being in overdraft for at least 10 months; significant gap between Arabs and Jews.
Over half of all Israeli households – 54 percent – overdrew their bank accounts in 2013, according to an Israel Central Bureau for Statistics survey whose results were released on Thursday.
The survey found that for 34 percent of households, the situation was not temporary. These households reported that they were in overdraft for at least ten months in 2013. 10 percent reported being in overdraft for up to three months, and another 10 percent reported being in overdraft for a period lasting between four and nine months.
The survey further found significant disparities between Arabs and Jews; many more Arab households were in overdraft for more than 10 months than Jewish ones – 45 percent compared to 32 percent.
Another indication of households' financial situation examined in the survey was whether a bank representative contacted it to say the credit limit had been exceeded. Unlike overdrafts, which banks in Israel are willing to tolerate for some time, being contacted by a representative means the bank is concerned that the household is falling into debt that it will never be able to repay.
37 percent of Israeli households were contacted at least once, according to the survey. 15 percent were contacted once or twice, 11 percent three to five times, and 11 percent six or more times, showing a serious problem with balancing expenditures and income.
A sharp disparity between Arab and Jewish households was also apparent regarding this problem. 57 percent of Arab families were contacted – 23 percent once or twice, 21 percent three to five times, and 13 percent six or more times. As for Jewish households, 35 percent of households were contacted – 14 percent once or twice, 10 percent between three to five times, and 11 percent six or more times.
Despite the many incidents of debt, few households had their bank accounts blocked in 2013. Two percent of households reported that their accounts had been blocked for one month, and four percent reported that their accounts had been blocked for more than a month.
The survey was conducted with a sample of about 4,600 households from different strata of Israeli society, and is part of a long-term survey the Bureau conducts every year to examine the financial situation of these households in order to study chances over multiple years.
The survey also looked at other aspects of financial conditions, such as taking mortgages.
29 percent of participants in the survey reported an active mortgage – 33 percent of Jewish households and seven percent of Arab households. 45 percent of couples with children under 18 had mortgages, while 36 percent of couples with children older than 18 and 34 percent of single parents had mortgages.
It is likely that the high proportion of couples with children older than 18 with a mortgage is related to low interest rates in recent years, which encourages many older couples to take mortgages in order to purchase apartments as investments.
The survey also found that in the case of single people and couples without children, the proportion of mortgages rises in correlation with age. When the older member of the couple was less than 40 years old, the proportion of mortgage ownership was nine percent. When the older member was more than 40, the proportion was 18 percent.
