The official figures on the housing market almost all indicate a sharp decline in activity in the sector in the past few months. Why "almost all"? Because, unlike the sales and prices figures, there is one statistic that remains high despite the slowdown: the monthly amount of new mortgage loans taken by the public. Israelis are buying fewer homes, but somehow that is not being felt at the mortgage banks.
According to Bank of Israel figures, new mortgage loans amounted to NIS 7 billion a month in January and February. In March, the figure reached NIS 9.16 billion. Later on, in July, it was NIS 10.6 billion, the highest since November 2024. The total fell slightly in August, but still remained high, at NIS 9.12 billion.
Sales down 20%
On the other hand, as mentioned, in the market itself the trend is completely different. There are two entities that regularly publish statistics on transaction volumes in the housing market in Israel: the chief economist’s department at the Ministry of Finance, and the Central Bureau of Statistics. The Ministry of Finance’s surveys appear monthly, and they clearly show the decline in the volume of deals, particularly in the second quarter of this year. April, May and June were among the weakest months recorded in the past 25 years: in April 6,254 homes were bought, in May 6,698, and in June 5,844 (the June figure was depressed by the Rising Lion campaign against Iran).
For the sake of comparison, in June 2024 8,160 homes were sold on the open market (that is, excluding homes built with government subsidies), and that was one of the weakest months in the past ten years. In more recent months the figures have picked up a little, but the level remains low: 8,011 homes were purchased in July, and 7,632 in August.
The Central Bureau of Statistics figures indicate a similar trend: In the period May-July this year, 21,640 homes were sold according to the Central Bureau of Statistics, 6% fewer than in the preceding three months (February-April), and almost 20% fewer than in the corresponding period of 2024.
Time to pay up
How can the gap between the decline in the number of deals and the constantly high level of new mortgage loans be explained? There is a certain time gap between signing a contract and taking a mortgage, especially in the purchase of a new home. When the contract is signed, the buyer has to put up initial equity, and only later does he or she pay the lion’s share of the price of the home. But even taking into consideration this timing difference, the mortgage figures do not reflect the market trends of recent months, and appear divorced from it.
One of the main reasons for that is the "maturing" of the special financing offers that flooded the market in the last two years, as developers tried to attract buyers deterred by high interest rates with all kinds of schemes that essentially postponed most of the payment to the handover date, with a down payment of as little as 15%, or even 10%. Now, we are reaching the stage at which these buyers need to take out a mortgage loan in order to meet the payment terms.
Avi Gabbay, CEO of the Israel Mortgage Advisors Association, says, "Buyers now have to make most of the payment on the home they bought through the financing offers, and they are starting to take mortgage loans in order to do so. But there are many other reasons, such as the government’s subsidized "Home at a Discount" scheme, in which the buyer has to secure a mortgage in accordance with a preset timetable, with no connection to market trends."
In addition, Gabbay points out, there have recently been many instances of people recycling mortgages and taking out new mortgage loans to replace existing ones "in order to improve the repayment terms."
Liran Sela, CEO and founder of Sela Investments and Finance, puts his finger on another factor arising from the Swords of Iron war and its effects. "The mortgages that we are seeing now are for deals signed two, three, or even four years ago. They should have reached the mortgage loan stage a long time ago, but because of delays caused by the war, everything was put back, and so the time for taking the mortgage was postponed. I see many cases like this."
The figures will come into line
Will the mismatch between the mortgage totals and deal volumes continue? "It’s hard to estimate whether this situation will continue," says Sela, "but I presume that mortgages will slowly synchronize more with the direction of market activity."
Sela sees demand and sales recovering before the volume of mortgages starts to decline. "The demand exists, and it will break out as soon as the interest rate starts to fall, even by 0.25%" he says. "You can see the unprecedented number of applications for ‘Home at a Discount’ lotteries now taking place. The demand is there, and in a year’s time that too will impact the mortgage figures."
Published by Globes, Israel business news - en.globes.co.il - on October 23, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.