Israel Mortgage Volume Surpasses Record Peaks Despite Real Estate Slowdown
Israel's mortgage volume has surged past 2021-2022 peak levels despite a real estate slowdown, fueled by a record wave of refinancing as interest rates decline.
Despite a general slowdown in the real estate market, Israel's mortgage volume has surged to levels surpassing the historic peaks of 2021-2022, driven primarily by a wave of mortgage refinancing, according to a special report published by the Association of Mortgage Consultants.
In September, mortgage volumes totaled 8.7 billion NIS, marking a 20% monthly drop that aligns with seasonal patterns due to the Tishrei Jewish holidays. Including all-purpose loans, total performance reached 9.1 billion NIS. However, the daily average volume rose moderately, indicating that the decline stems from fewer business days rather than weakened demand.
Refinancing Drives Record Momentum
Since the beginning of the year, housing mortgage performance totaled 88.3 billion NIS—a 12% increase compared to the same period last year. Including all-purpose loans, the figure reached 93.3 billion NIS, remaining slightly above the record highs of 2021-2022. Analysts point out that this growth is largely fueled by refinancing. As interest rates decline, borrowers rush to refinance, and the Bank of Israel counts these as new loans, artificially inflating market activity despite actual market cooling.
Internal refinancing rose to 25% of total performance in September, while external refinancing climbed to 8.8%. Meanwhile, bridge loans dropped from 12.4% to 12.2%, whereas riskier all-purpose loans edged up from 4.7% to 4.9%. Borrowers also shifted toward the prime interest rate track, increasing its share from 24% to 26% at the expense of variable-rate loans, as lower rates directly reduce monthly payments.
Q3 Performance and Loan Averages
Total housing loan performance in the third quarter of 2026 reached 31.1 billion NIS, or 32.7 billion NIS including all-purpose loans—surpassing all quarters since early 2021 except for Q4 2021 and the first two quarters of 2022. The average loan amount in 2026 stands at roughly 1.08 million NIS, weighed down by subsidized purchases and other acquisition categories, though neutralizing these factors brings the average closer to 1.20 million NIS.
Regarding mortgage defaults, the rate climbed from 0.42% in late 2022 to a peak of 0.69% in October 2025, before settling at 0.62%, representing approximately 4.2 billion NIS. The Association of Mortgage Consultants noted that high interest rates have pressured borrowers' repayment capacities, though the default rate remains low relative to the total credit portfolio of roughly 714 billion NIS.
