Better than Switzerland, less than South Africa: The index where Israel stands out

We have already presented two fascinating cross-sections from the UBS investment bank's global wealth report for the end of 2025: the ranking of the wealthiest countries by average and median wealth, where Israel is ranked 18th and 24th respectively, and the table in which Israel leads the entire world — the share of financial assets out of total household assets, 82.1%. But the wealth picture of a country is incomplete without the other side of the balance sheet. Alongside assets, every household also has liabilities.

Here, another table in the report comes into the picture, measuring a simple yet significant parameter: the debt-to-gross-capital ratio. That is, what part of the households' assets in the country is actually financed by loans — mortgages, consumer credit, bank loans, and all other liabilities.

This is the leverage index of the household economy, and it tells us not only how much property citizens have, but how much of this property actually belongs to them. The higher the rate, the more wealth "relies" on credit.

At the top of the list presented in the report is Brazil with 23.4%, followed by Cyprus (20.7%), Switzerland (20.5%), the UK (20%), Canada (18.2%), and Australia (18%).

Israel is ranked seventh with 14.4%, just before South Africa (14%), France (13.7%), and Japan (12.7%). It is interesting to note that in the report's text, UBS also mentions Norway, with a debt ratio exceeding a quarter of total capital, alongside countries at the opposite end of the scale: Mexico with only 5.2%, Saudi Arabia and the UAE around 6%, Hong Kong below 7.5%, and Italy just under 9%. In the USA, Germany, and China, the rate fluctuates around 10% to 11%.

The conclusion regarding Israel is twofold. On one hand, Israeli households are less leveraged than those in Switzerland, the UK, Canada, and Australia. On the other hand, the debt ratio in Israel is higher than in South Africa, France, and Japan, and significantly higher than the rates in the USA and Germany. Israel is not in an extreme situation, but it is definitely in the upper part of the table.

Debt in itself is not a bad thing. A mortgage allows a family to purchase an apartment decades before it is able to pay for it in cash. Available credit is a sign of a developed financial system and the banks' trust in the public's repayment capacity. In many developing countries, the debt ratio is low simply because it is difficult to get a loan, and that is not necessarily an advantage.

The problem begins with high leverage. A large debt ratio means that household wealth depends more on repayment ability and less on actual ownership of assets. As long as the economy is growing, wages are rising, and the interest rate is reasonable, the system works and borrowers pay back the money.

But in a period of slowdown, layoffs, or a sharp interest rate hike, the picture flips: the monthly payment becomes more expensive, some borrowers struggle to meet it, and if asset prices fall simultaneously — the asset's value might shrink faster than the debt taken to finance it. This is exactly the mechanism that has driven financial crises in the past.

The relatively high debt ratio mainly reflects the weight of mortgages in the household balance sheet, against the backdrop of housing prices in Israel. Anyone who has taken a mortgage that is relatively high compared to their income is more vulnerable to a scenario of an interest rate hike or a decrease in income.

The simple rule: debt taken to purchase an asset whose value is maintained over time is fundamentally different from expensive consumer credit, and it is worth checking from time to time what the ratio is between your liabilities and your assets.

The bottom line: after seeing how many assets Israelis have and how they are distributed, this index completes the picture — and as in any company's balance sheet, what is on the liabilities side is no less important than what is on the assets side.