Israeli Mortgage Activity Stable Despite Holiday Dip, Bank of Israel Reports
Translated & summarized from Ynet by baba
Israeli mortgage lending for housing dropped 20.5% in September to NIS 8.66 billion due to holidays, but daily lending activity remained stable and even increased. Year-to-date lending is up 12% compared to last year, indicating a strong credit market. Borrowers are increasingly choosing prime rate loans, while inflation-linked loans remain low. Experts advise careful risk management for borrowers.
The story in 5 lines · by baba
- Israeli housing mortgage lending fell 20.5% to NIS 8.66 billion in September due to holidays.
- Daily mortgage lending pace increased by 3% to NIS 536 million per business day.
- Year-to-date housing loans total NIS 88.3 billion, a 12% increase from last year.
- Borrowers are shifting towards prime rate loans, increasing their share to 26%.
- The credit market remains strong, contrasting with a weaker real estate market.
Mortgage lending in Israel for housing fell by 20.5% in September, totaling NIS 8.66 billion, according to the latest monthly report from the Bank of Israel. When including all-purpose loans, the total reached NIS 9.1 billion. This seasonal decline is attributed to the Rosh Hashanah and Sukkot holidays, which reduced business days. However, the report emphasizes that the daily lending pace remained strong, even increasing by approximately 3% to NIS 536 million per business day compared to August.
Despite the dip in overall lending, the proportion of all-purpose loans rose to 4.9% of total activity. The report indicates that the underlying market and actual demand remained stable, with the daily business day pace demonstrating consistent activity. This suggests that the lower monthly figure was a direct result of the holiday period, a pattern observed in previous years.
Year-to-date, total housing loan performance stands at NIS 88.3 billion, a 12% increase compared to the same period last year, surpassing the peak performance of 2021 and 2022. This robust credit market activity, contrasted with a weaker new real estate market, points to the maturation of past developer financing deals into actual mortgages.
Borrowers are increasingly favoring the prime interest rate track, which now constitutes 26% of loans, up from 24%, at the expense of the fixed-rate track. Inflation-linked tracks remain at a multi-year low of 8%. Bridge loans saw a slight decrease from 13.0% to 12.8%, and the weighted interest rate dropped marginally from 4.38% to 4.35%.
The Association of Mortgage Consultants advised borrowers to continue diligent risk management, build balanced loan portfolios, and align repayment amounts with their actual financial capacity. They noted the continued strength and stability of the credit market, distinguishing it from the weaker housing market, and reiterated that this disparity reflects past financing deals now converting into mortgages.
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