Israeli Private Sector Debt Surges to 2.6 Trillion Shekels

Private sector debt in Israel, encompassing both businesses and households, saw a 3.6% increase in the second quarter of 2026, reaching approximately 2.6 trillion shekels. This rise was driven by increased bank borrowing by the business sector and continued growth in household debt, according to a Bank of Israel report.

Business sector debt climbed by about 67 billion shekels, or 4.2%, to nearly 1.7 trillion shekels, primarily through bank credit. The report indicated a net increase of around 79 billion shekels in business debt during the quarter, largely from bank loans, with a notable rise in tradable bonds issued by Israeli companies also contributing to non-bank financing. The annual growth rate of business debt accelerated to approximately 13.8%, reversing a slowdown from the previous two years. Bank debt grew by about 19% annually, compared to 6.6% for non-bank debt. Bank of Israel attributed some of this growth to loans for the financial services sector, as well as the construction and real estate sectors. While inflation increased the value of some index-linked debts, a 5.9% appreciation of the shekel against the dollar reduced the shekel value of foreign currency-denominated debts.

In the bond market, businesses issued nearly 33 billion shekels in bonds during the quarter, with real estate and construction companies accounting for about 52% of these issuances. This indicates their continued dominance in fundraising activities.

Household debt also continued to rise, increasing by 22 billion shekels, or 2.4%, to approximately 935 billion shekels. Non-housing debt experienced the fastest growth, up 3.6% to about 260 billion shekels, reversing a slight decline in the previous quarter. This increase was seen across major lenders, including banks, credit card companies, and financial institutions. Housing debt grew by 1.9% to about 675 billion shekels, mainly owed to banks. The annual growth rate for non-mortgage debt accelerated to about 10%, while housing debt growth remained around 7%. The Bank of Israel noted that new mortgage lending in the second quarter was approximately 29 billion shekels, consistent with the average of the previous four quarters, and this trend continued into July and August.