High Mortgage Volume in June Reflects Past Deals, Not Housing Market Revival

In June, mortgage loans totaling approximately 11 billion shekels were taken out in Israel, but this surge does not indicate a current revival in the housing market. According to an analysis by the Chief Economist Division of the Ministry of Finance, the high mortgage figures primarily result from buyers fulfilling contracts signed years ago rather than a new wave of home purchases.

The Ministry of Finance explains that mortgage data is published before transaction data, even though loans are only taken after purchase contracts are signed. In recent years, especially in the new housing market, there has been a significant time gap between contract signing and mortgage uptake due to "off-plan" transactions and financing schemes like 20/80, where buyers pay a small portion upfront and the remainder upon delivery.

Between 2020 and 2021, a large gap emerged between the number of transactions and mortgages due to high demand and housing shortages. Although this gap narrowed after interest rate hikes, it expanded again with the spread of developer financing incentives. In 2025, following Bank of Israel restrictions on such financing, free-market transactions dropped sharply, but mortgage volumes remained high as older contracts were fulfilled.

Mizrahi Tefahot Bank's retail division head, Shabi Shamer, echoed this trend at the "Era of Regulation" conference, noting that the current high mortgage volume stems from deals signed two to five years ago. She forecasts that mortgage volumes will remain stable or rise through 2026-2028, with any decline in transactions reflected in mortgage data only after three to four years. Shamer also highlighted that a stronger shekel is helping curb inflation and may lead to interest rate cuts to around 3% by year-end, potentially attracting waiting buyers back to the market.

Moshe Feldmar, VP of Marketing and Business Development at Adith Financing, added that developer financing campaigns and alternative lending solutions have helped young couples and home upgraders amid high interest rates. He cautioned that while the market remains uncertain and not yet "boiling," suppressed demand could quickly reemerge once stability signals appear.