Israeli Mortgage Demand Remains Strong Despite Seasonal Dip
Translated & summarized from Behadrei Haredim by baba
Israelis borrowed 8.66 billion shekels for housing in September, a slight seasonal decrease, but daily credit activity rose. The year-to-date housing loan volume is up 12% compared to last year, indicating a strong credit market. The prime rate loan track is gaining popularity, while fixed-rate indexed loans remain low. Experts attribute the strong credit market to the realization of past financing deals despite a weaker real estate market.
The story in 6 lines · by baba
- Israeli housing loans totaled 8.66 billion shekels in September, with daily credit activity increasing.
- Year-to-date housing loan volume reached 88.3 billion shekels, a 12% increase from last year.
- The prime rate loan track's share rose to 26% of all loans, while fixed-rate indexed loans stayed at 8%.
- The Association of Mortgage Advisors cited seasonal factors for the monthly decrease in loan volume.
- Experts note a gap between the strong credit market and a weaker real estate market.
- The weighted average interest rate on mortgages slightly decreased to 4.35%.
In September, Israelis took out 8.66 billion shekels in housing loans, with total credit reaching 9.1 billion shekels including general-purpose loans, according to the Bank of Israel's latest monthly mortgage report. While this represents a nominal 20.5% decrease from August, the Association of Mortgage Advisors attributes this to the seasonal slowdown during the High Holidays. When adjusted for fewer business days, the daily pace of credit activity actually increased by approximately 3% from August to September, reaching about 536 million shekels per business day.
Cumulatively, the year-to-date credit market has been exceptionally strong, with 88.3 billion shekels disbursed for housing. This figure is 12% higher than the same period last year and positions the annual pace slightly above the records set in 2021 and 2022. The report also noted a shift in loan preferences, with the prime rate track increasing its share to 26% of all loans, up from 24% in August, largely at the expense of the variable interest rate track. Fixed-rate indexed loans remained at a multi-year low of 8%, and bridging loans saw a slight decrease to 12.8%. The weighted average interest rate also saw a minor drop from 4.38% to 4.35%.
Avi Yusupov, Deputy Chairman of the Association of Mortgage Advisors, commented on the data, stating, "The market continues to be strong and stable, operating differently from the weakened real estate market. This gap between a booming credit market and a weak housing market continues to indicate the realization of past deals with financing promotions, which are now maturing into actual mortgages." This persistent gap between active credit markets and a slowdown in new real estate transactions is explained by the maturation of previously offered contractor financing deals into actual mortgages.
