Postponing the payment: balloon mortgage loans jumped by 20% in a year
Over the past year, the portfolio of balloon and bullet mortgage loans has grown by approximately 20%, significantly outpacing the growth of the total mortgage market. By July 2026, the balance reached 29.2 billion shekels.
The mortgage market has grown over the past year, but there is an asterisk. Within a year, the portfolio of balloon and bullet mortgage loans has grown by approximately 20%, much higher than the growth rate of the total mortgage portfolio.
In July 2026, the balance reached 29.2 billion shekels, compared to 28.74 billion in June, 28.38 billion in May, and 28 billion in April. In other words, within one month, there was an increase of 1.5% in the volume of balloon loans and an increase of 4% over three months. Since the beginning of the year, the volume of balloon loans has increased by 2.2 billion shekels, an increase of 8%.
A balloon mortgage loan is a loan where a significant portion of the principal, and sometimes the entire principal, is not repaid gradually each month, but in a large payment at the end of the loan term. Thus, the growth of balloon loans is a form of payment deferral for customers.
For example, a home buyer takes a balloon loan of one million shekels for two years. During the two years, he may pay only the interest, and at the end of the two years, he must repay the one million shekels of principal at once. In a "full balloon," the interest can also accumulate and be paid at the end.
Between 2022 and 2024, balloon loans grew as part of 80/20 financing promotions, where the home buyer pays 20% at the time of purchase and the remaining 80% upon delivery of the apartment. Contractors provided balloon loans to buyers, with the contractor bearing the interest during the waiting period for the apartment.
The risk is that the large repayment is simply deferred to the future. The buyer assumes that by the maturity date, he will be able to take out a regular mortgage, sell another asset, or obtain the money in another way. If apartment prices fall, his financial situation changes, or the bank refuses to give him the mortgage he planned on, he may have difficulty paying the full amount borrowed in the balloon.
It also emerges that the average mortgage of an Israeli borrower amounted to 1.2 million shekels, very close to the all-time high recorded last March of 1.3 million shekels. The volume of mortgages in July amounted to 11.56 billion shekels, the highest amount since December 2024.
