Market Cools as War, Interest Rates and Headlines Slow Housing Demand

Bank of Israel data for May show that the mortgage market continues to demonstrate strong resilience even amid security and economic uncertainty. Mortgages for housing totaled about 9.687 billion shekels, an increase of 22% compared with April, while total mortgage executions, including loans for any purpose, reached about 10.217 billion shekels. It is important to remember that April’s decline was influenced in part by Passover and the reduced number of workdays, so part of the increase in May reflects a return to a normal pace of activity. Even so, the data indicate that underlying demand for housing in Israel remains strong, even as the interest rate environment is still high and the security situation is far from simple.

The most significant figure is the cumulative one. Since the beginning of the year, housing mortgages totaling about 46.1 billion shekels have been taken out, up 11.8% from the same period last year. This indicates that the public continues to advance real estate transactions and make long-term decisions despite the many challenges facing the economy. The Mortgage Advisors Association says it is interesting to note that the share of loans for any purpose fell from 5.6% to 5.2%, suggesting that most activity is directed toward apartment purchases and genuine housing needs, rather than expanding general credit consumption. At the same time, the share of bridging loans remained relatively stable at 15.3%, a figure showing that homebuyers upgrading their properties remain a significant player in the market. The message from the data is that, contrary to many expectations at the start of the year, the Israeli public is not freezing housing decisions. It is examining, hesitating and acting cautiously, but ultimately continues to move forward. The need for housing remains one of the strongest forces in the Israeli economy, even in difficult periods. Precisely at a time when every financial decision is affected by interest rates, market volatility and uncertainty, it is more important than ever to receive professional and objective guidance from a mortgage adviser who is a member of the association, in order to make the best decision for the family and its financial future.