"A cash flow survival strategy": Installment payments help get through the month
The number of installment transactions rose by 64% compared to June 2025, with the total volume jumping by 79%, according to data from Menora ERN. While installment payments are not inherently problematic, it is crucial to determine whether this reflects sound financial management or merely a deferral of current cash flow issues to future months.
In recent years, tens of thousands of Israelis have chosen to refinance their mortgages, replacing old loans with "better" ones. This is done not to reduce the total debt, but to ease monthly payments—effectively buying time rather than saving money. According to Bank of Israel data, in 2025, over 10,000 mortgage holders refinanced their loans while extending the repayment period amid rising interest rates. This reflects a cash flow strategy aimed at reducing monthly burdens, even at the cost of increasing the total loan amount. Consequently, the average mortgage term has reached a peak of 27 years, nearing the legal limit of 30.
New data from Menora ERN, a subsidiary of Menora Mivtachim, indicates that installment payments have become a widespread trend far beyond the real estate sector. This explains why private consumption remains resilient despite the erosion of purchasing power, while simultaneously highlighting a growing debt problem.
"Small Mortgages"
The average transaction size paid by check in June rose to approximately 3,230 NIS, a 23% increase compared to June of last year and a 7% rise over May. In the realm of standing orders—used for items like furniture or home renovations—the trend is even more pronounced: the number of installment transactions rose by 64% compared to June 2025. The total volume of these transactions jumped by 79% year-on-year, with the average transaction size reaching about 12,900 NIS.
This phenomenon is particularly visible in service sectors: car repairs and dental treatments averaged 15,000 NIS in June. Specifically, standing orders for garage services surged by 250%, dental treatments by 80%, and furniture purchases by 32%.
Shay Framinger, CEO of Menora ERN, notes that when average checks in central regions exceed 4,500 NIS, and costs for repairs or medical treatments hit the 15,000 NIS range, it is no longer just about consumption—it is a "cash flow survival strategy." Consumers are changing how they pay to ensure they have enough liquidity for groceries, electricity, and essential healthcare.
Stars of the Week
Excellent: The regulator loosens its grip.
An important reform announced this week by the Ministry of Health, aimed at drastically reducing restaurant regulations, highlights how excessive bureaucracy had spiraled out of control. Eliminating absurd requirements—such as mandatory ice cube stocks or specific tile colors in kitchens—is a welcome step that will help reduce operating costs for struggling eateries.
Insufficient: The betterment levy (hitel hashbaha) remains stagnant.
The rationale behind the betterment levy—taxing 50% of the value increase resulting from land-use changes—has turned into a source of strategic uncertainty in practice. After three years of work, a government task force released a 95-page interim report that fails to propose deep reforms, merely suggesting that "alternatives continue to be studied." This leaves the real estate market in a state of limbo due to the lack of clarity in valuation mechanisms.
