Mortgage Activity Dips in September, Marking Lowest Point in Four Months
Translated & summarized from Ice by baba
Mortgage lending in Israel fell by approximately 2% in September 2026 to 8.668 billion shekels, marking the lowest volume in four months. This decline occurred despite falling interest rates, which had previously fueled record lending in July and August. The September figures are not considered seasonally unusual, as the month typically sees lower activity. However, the trend contrasts with a recent positive development showing a decrease in mortgage defaults.
The story in 5 lines · by baba
- Mortgage lending in September 2026 dropped to 8.668 billion shekels, the lowest in four months.
- This September figure represents a 2% decrease compared to the same month last year.
- July and August saw record and high mortgage volumes, respectively, driven by refinancing.
- Falling interest rates and changes in loan track preferences are key reasons for refinancing.
- Despite the dip, mortgage defaults continued to decline in August.
Mortgage lending in Israel saw a notable decrease in September, reaching its lowest point in four months, despite a general trend of falling interest rates. The total volume of new mortgages taken out in September 2026 stood at 8.668 billion shekels, a roughly 2% decline compared to September of the previous year, which saw 8.856 billion shekels. This figure represents the worst monthly performance since April, a period significantly impacted by Iran's attack.
This downturn contrasts with the strong performance observed earlier in the year. July recorded a record high of 11.5 billion shekels in new mortgages, reflecting a 13% increase year-to-date. August also saw a significant jump, with 10.899 billion shekels in new loans, up from 9.118 billion shekels in August 2025. These increases were largely driven by homeowners refinancing their existing mortgages to take advantage of lower interest rates.
Despite the September dip, the overall volume is not considered seasonally unusual, as September has historically been a weaker month for mortgage activity. For instance, September 2024 saw 8.544 billion shekels in mortgages, and September 2023 recorded 5.488 billion shekels. The recent decline in interest rates, including three consecutive reductions, has been a primary driver for mortgage refinancing.
Homeowners are motivated to refinance for several reasons: falling interest rates make new loans more attractive than existing ones, potentially lowering monthly payments. Changes in loan track conditions, with a growing preference for the prime rate track over variable-rate mortgages, also play a role, especially with expectations of further rate cuts. Additionally, refinancing can improve household cash flow by extending repayment periods or adjusting monthly payments to current financial capacities.
In a separate positive development, the Bank of Israel noted a decrease in mortgage defaults in August. Only about 0.6% of mortgage holders are currently in arrears, with the total amount of defaulted loans falling to 4.1 billion shekels, a trend that has continued its decline.
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