Migdal Insurance Enters Mortgage Market, Partnering With Jerusalem Bank

Migdal Insurance is expanding into the mortgage sector, following similar moves by Phoenix Finances and Harel Insurance. The company has signed a cooperation agreement with Jerusalem Bank, which will handle the operational aspects of the mortgages, while Migdal will provide the capital and set the strategy. The new mortgage offerings will primarily target real estate investors and existing property owners looking to leverage their assets, but will also be available to homebuyers and those looking to upgrade their residences.

Despite a relative slowdown in the investment property market due to high interest rates, Migdal aims to compete with banks by offering more flexible financing terms. Specifically, Migdal is offering up to 60% financing on investment properties, exceeding the typical 50% offered by banks. Harel, a competitor, offers up to 80%. Migdal is also introducing loans with repayment periods of up to 40 years. Other major insurance companies, including Menora Mivtachim and Clal Holdings, have also recently expanded their mortgage activities.

Migdal's entry marks its significant move into a market where banks currently hold a 95% share, with NIS 110 billion in mortgages issued in 2025 alone. Insurance companies are seeking stable profit engines to balance their reliance on capital markets. They are targeting a niche between traditional banks and non-bank credit companies, focusing on clients with assets and repayment capacity who may struggle to secure desired financing from banks.

The timing of Migdal's launch is strategic, coinciding with a Bank of Israel regulatory change effective October 1st. This change will alter how banks calculate borrowers' debt-to-income ratios, potentially making it harder for those who have already leveraged their properties to obtain additional credit. Non-bank lenders, including insurance companies, are not subject to these new regulations, positioning them as an alternative for such borrowers.

Erez Megidli, Head of Investments at Migdal Insurance and Finance, stated that entering the mortgage market is a significant step in expanding Migdal's investment activities, leveraging its financial stability and public trust. He added that the partnership with Jerusalem Bank allows them to offer a competitive, flexible, and efficient alternative to customers and distribution partners. Migdal's stock has seen significant growth, rising 88% in the past year, with the company valued at NIS 22.4 billion.