Mortgage Lending Hits Record High in Israel Amidst Housing Market Slump

Mortgage lending in Israel reached NIS 10.9 billion in August, positioning 2026 to be a record year for the sector, according to a Bank of Israel report. The data indicates a continuing trend of borrowers shifting towards prime-rate-linked mortgage options.

This surge in lending occurs despite a slowdown in the broader real estate market, which mortgage advisors attribute to a strong credit market operating independently. The average monthly mortgage volume this year stands at NIS 10 billion, up from NIS 8.8 billion in 2025 and NIS 7.8 billion in 2024.

The composition of mortgages is also changing, with prime-linked loans increasing their share from 22% to 24% of the total, while variable, non-indexed loans have decreased. Bridging loans saw a slight reduction in their share, falling from 13.9% to 13.0% of housing loans.

Notably, the proportion of mortgages taken out under 'bullet' and 'balloon' payment structures, often associated with developer financing schemes, has fallen to its lowest point since late 2023, representing 13% of all mortgages in August. While it's too early to definitively link this to a significant shift in the real estate market or a reduction in developer financing deals, it marks the third consecutive quarterly decrease in these types of loans.

Mortgage advisors suggest that the robust credit market reflects the maturation of past financing deals and a growing public confidence in prime-rate mortgage options. They also advise borrowers to remain vigilant and adapt to ongoing market changes.