Israeli Mortgage Lending Hits Record High Amid Housing Market Slowdown
Translated & summarized from Behadrei Haredim by baba
Israeli mortgage lending has surged to NIS 97.5 billion year-to-date, a 14% increase from last year, despite a slowdown in apartment sales. Consumers are shifting away from index-linked loans towards prime-rate options, anticipating future interest rate drops. Experts warn borrowers to carefully assess repayment capacity in the current high-lending, high-interest rate environment.
The story in 5 lines · by baba
- Israeli mortgage lending has surpassed NIS 97.5 billion this year, a 14% increase from 2022.
- The high lending volume continues despite a slowdown in actual apartment sales.
- Borrowers are avoiding index-linked loans, with prime-rate options now at 28% of all loans.
- The average weighted nominal interest rate rose slightly to 4.42% in October.
- Experts caution borrowers to carefully assess repayment capacity due to high lending and interest rates.
Mortgage lending in Israel has reached an unprecedented level, with NIS 97.5 billion taken out in mortgages since the beginning of the year, according to Bank of Israel data for October. Including all other loans, the total reaches NIS 103.1 billion. This represents a significant 14% increase compared to the same period last year, positioning the current year to be one of the strongest on record.
In October alone, mortgage lending amounted to NIS 9.284 billion, a 7% monthly increase, a typical rise following the High Holidays. These figures are particularly striking given a general slowdown in actual apartment sales. Avi Yusupov, Deputy Chairman of the Association of Mortgage Advisors, explained that the high financing volumes are primarily driven by the completion of past deals and financing promotions, rather than current property transactions.
The data also reveals a shift in consumer behavior. Israelis are increasingly avoiding index-linked mortgage tracks, which now constitute only 8% of all loans, a historic low. Conversely, prime-rate loans have grown to 28%, largely at the expense of non-linked variable-rate options. This suggests borrowers are anticipating future interest rate decreases, despite a slight increase in the average weighted nominal interest rate to 4.42% in October.
Bridge loans saw a slight rise, accounting for 13% of total credit, while the share of general-purpose loans remained stable at 4.9%. In light of these record lending figures amidst a challenging interest rate environment, Yusupov cautioned borrowers to remain vigilant, carefully assess their repayment capacity, and tailor their mortgage mix to their actual needs.
