Israeli Mortgage Activity Shifts Dramatically in September
Translated & summarized from Mako by baba
In September 2026, Israeli mortgage volume fell 20.5% from August to 8.668 billion shekels, but prime rate mortgages surged 150%. Index-linked mortgages decreased significantly, while non-indexed loans dominated. Despite the monthly dip, year-to-date mortgage activity is up 12% for 2026. Experts cite interest rate expectations for the prime rate increase, warning of associated risks.
The story in 5 lines · by baba
- Prime rate mortgages in Israel jumped 150% in September 2026 compared to the previous year.
- Total mortgage volume in Israel decreased by 20.5% in September 2026 from August.
- Index-linked mortgages saw a significant drop in their share of new loans.
- Year-to-date mortgage activity in 2026 is up 12% compared to the same period in 2025.
- The shift to prime rate mortgages is linked to expectations of future interest rate cuts.
In September 2026, the total volume of mortgages taken in Israel decreased by 20.5% compared to August, reaching approximately 8.668 billion shekels. This figure also represents a 2.1% drop from September of the previous year. Despite the overall decline, there was a significant shift in borrower preferences, with a 150% surge in mortgages taken under the prime rate track, totaling 1.994 billion shekels. This contrasts sharply with a decrease in index-linked mortgages, which accounted for 9.1% of new loans, down from 14.1% in the same period last year. Mortgages not linked to the index constituted the majority, at 90.8% or 7.874 billion shekels.
Loans for balloon and bullet mortgages, often used in contractor financing, saw a decline of 21.2% from August and 17.3% from September 2025, amounting to 1.114 billion shekels. However, looking at the year-to-date figures for 2026, total mortgage activity reached 88.26 billion shekels, an increase of 12% compared to the same period in 2025.
Data from August indicated that 48.5% of mortgages were for 60% to 75% of the property value, with the average repayment from income at 29.23%. Eyal Elchayani, CEO of Luzone Credit and Finance, suggested the rise in prime rate mortgages reflects expectations of interest rate reductions. He cautioned, however, that this strategy carries risks, as the prime rate is variable and borrowers could face higher payments if rates do not fall as anticipated. Elchayani noted that borrowers are now considering the certainty offered by loan terms, not just the initial repayment amount.
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