Israeli Mortgage Market Surges 14% Amidst Weak Real Estate Sector

Israel's mortgage market has shown significant activity in the first eight months of 2026, with the volume of housing loans reaching approximately 79.6 billion shekels. This represents a 13.8% increase compared to the same period last year, despite a continued downturn in the broader real estate market. In August alone, banks issued 10.9 billion shekels in mortgage loans, a slight 5.7% decrease from July, though the overall volume remained high. When including loans for various purposes alongside housing loans, the total rises to about 11.4 billion shekels.

The Mortgage Advisors Association attributes this divergence to the maturation of earlier deals, where developers offered financing packages that are now being finalized with bank loans. This explains why the robust mortgage activity does not necessarily reflect a recovery in property sales.

Within August's loan composition, there was a shift towards prime rate-linked loans, increasing their share from 22% to 24%. Conversely, loans tied to variable rates not linked to an index saw a decrease. Bridge loans, used for short-term financing, also declined as a percentage of total housing loans, falling from 13.9% to 13%. The average weighted interest rate on loans saw a marginal increase, rising from 4.34% to 4.38%.

The association described the housing loan market as "continuing to maintain its strength and stability," acknowledging its different trajectory from the weaker real estate market. They also noted a gradual return by borrowers to relying more on prime rate loans, while cautioning individuals to carefully monitor interest rate changes and borrowing terms before making financial decisions.