Israeli Consumer Debt Surges as Households Take on More Loans

Data from the Bank of Israel reveals a significant shift in Israeli consumer credit behavior. In the second quarter of 2026, non-mortgage debt, used for consumption, experienced a sharp increase of 3.6% over three months, amounting to approximately 9 billion shekels. This brought the total non-mortgage consumer debt to around 260 billion shekels.

This surge marks a notable change from the preceding two quarters. In late 2025, non-mortgage debt stood at 250-251 billion shekels, with a modest 1.6% increase. The first quarter of 2026 saw this trend stall, with debt levels remaining stable or even slightly decreasing by 0.1%.

The second quarter's turnaround saw non-mortgage debt grow at an annual rate of about 10% by the end of June, a significant jump from 5.7% at the end of the first quarter and around 6% at the end of 2025. This accelerated growth rate for non-mortgage debt now surpasses that of mortgage debt, which grew annually at about 7%.

Banks remain the primary source of this credit, holding approximately 70% of all non-mortgage household debt. Bank lending for non-mortgage purposes increased by about 4 billion shekels in the second quarter, reaching 181 billion shekels. Credit card companies also saw an increase, with debt rising from 45 billion shekels to 48 billion shekels in the quarter. Institutional lenders experienced a similar trend, with non-mortgage debt growing from 25 billion shekels to 28 billion shekels.

Overall household debt reached about 935 billion shekels by the end of June, a quarterly increase of 22 billion shekels. While mortgage debt grew by 1.9%, non-mortgage debt's 3.6% quarterly increase highlights the acceleration of household borrowing outside the mortgage market.