Israeli Mortgage Volume Surges in July Amid Warnings of Illusory Housing Market Recovery

In July, Israelis took out mortgages totaling 11.563 billion shekels, marking an 8% increase compared to the same month last year and one of the highest monthly mortgage volumes in recent years, according to Bank of Israel data released on Wednesday. Since the start of 2026, mortgage volumes have reached approximately 68.7 billion shekels, a 13% rise from the previous year, with projections suggesting the year could close at around 118 billion shekels, surpassing 2025's 105 billion shekels.

However, mortgage advisors warn that this surge does not reflect a new wave of housing demand but rather payments for purchases made two to three years ago, especially in new apartment deals with developers involving deferred payments. These transactions were recorded in sales data years earlier, but the mortgage financing is only now being drawn. This phenomenon, described as "past commitments," explains why mortgage data may not mirror current housing market activity.

The advisors also noted a shift in mortgage types, with a decline in index-linked loans to about 9%, an increase in prime-rate loans to 22%, and growth in variable-rate loans not linked to the index. Mortgages for general purposes accounted for 4.7%, while long-term housing credit made up 82% of the total.

Despite the high mortgage volumes, experts caution that these figures create an "optical illusion" of market strength, potentially leading to dangerous complacency. They urged Israeli leaders to continue addressing the housing crisis urgently, likening it to a critical national challenge akin to security issues.

Additionally, recent data from the Ministry of Finance's Chief Economist's Office showed a rise in housing transactions in June compared to an unusually low June 2025, but also an increase in cancellations of developer contracts from 2023-2025, reinforcing concerns about ongoing difficulties in the housing market.