A sweeping State Comptroller report released Wednesday says Israel has lost control of its mortgage market, leaving homebuyers exposed while regulators lacked a full picture of borrowing, interest rates, and household leverage. Comptroller Matanyahu Englman argues that consumer protections eroded, oversight was fragmentary, and the government tried to shift blame for soaring housing costs instead of confronting the roots of the crisis.
The report says home prices have risen 52% over the past decade, total mortgage debt has doubled to 630 billion shekels, and the average monthly repayment climbed from 4,200 shekels in 2019 to about 5,800 today, outpacing wage growth. It says no government body knows the market’s true size, and that off-bank lending has grown without proper supervision from the Capital Market, Insurance and Savings Authority. The number of licensed nonbank credit providers jumped nearly 900% from 157 in 2018 to 1,536 in 2024, yet regulators still lack data on nonbank mortgages.
Englman also highlights hidden leverage in the ultra-Orthodox sector, where purchases often rely on a bank mortgage, a community gemach loan, and sometimes nonbank credit. Because gemach loans are not reported to the credit database, banks cannot assess real risk. He says about 90% of gemachim do not meet licensing requirements and 68 operate without any license. In the Arab sector, which makes up more than 20% of Israel’s population, only 2% of mortgages are issued, partly because of structural barriers, too few Arabic-speaking advisers in banks, and sparse bank branches in Arab towns.
The report criticizes the Bank of Israel for responding late to known risks, including the end of the one-third cap on the prime-rate share of a mortgage at the end of 2020. When rates surged in 2022 and 2023, borrowers with larger prime exposure saw payments rise by more than 1,000 shekels on average. It also says a 2022 transparency reform meant to simplify comparison between banks failed, since the share of borrowers comparing offers fell from 44% to 37%.
The comptroller says mortgage advice remains largely unregulated, even though the share of borrowers using advisers rose from 20% in 2017 to about 61% in 2025. There are no licensing exams, ethics rules, or complaints mechanism, while some advisers receive commissions, prizes, and even overseas trips from nonbank lenders without telling clients. One company allegedly charged a fee equal to 10% of the mortgage amount. Bank of Israel called the report “unprofessional, full of errors and contradictions,” and defended its oversight and mortgage-lending interventions.
