Mizrahi Tefahot Executive: What to Expect in the Real Estate Market

Mizrahi Tefahot is considered the largest bank in Israel in terms of market share. The bank's senior executives have shared their insights on the future of the real estate sector and the current volume of the mortgage market.

This week, it was reported that mortgage volumes are heavily influenced by past transactions. Many new contracts involve deals signed before financing restrictions were implemented. The impact of the current market will only be visible after a relatively long period. As part of the "Era of Regulation" conference held by the Mortgage Consultants Association, Shevi Shamir, Deputy CEO and Head of the Retail Division at Mizrahi Tefahot Bank, addressed the issue.

"I do not foresee the mortgage market declining in the next two years. If I look two years ahead, we will certainly see that in 2026, 2027, and 2028, the volume of mortgages will be similar to the current year and will even increase," she said.

According to Shamir, the high volume of mortgages today does not stem from a recovery in the housing market:

"It is the result of the realization of transactions signed in the last two to five years, using schemes such as linear payments and contractor subsidies. Even if we see a decrease in the number of real estate transactions, its impact on the volume of mortgages will only be reflected in three to four years."

She explains that the strengthening shekel helps keep inflation within the target range, increasing the likelihood of further interest rate cuts to about 3% by the end of the year. "The interest rate cut is expected to encourage homebuyers who are currently sitting on the fence," she adds.

Regarding whether the housing market is in crisis, she noted:

"I do not see a crisis in the housing market. There are localized difficulties in certain areas where contractors are lowering prices, but after two years of stagnation, we usually see the market return to price increases."

Shamir's remarks follow comments by the bank's CEO, Moshe Lari, on the mortgage issue. Lari stated that the mortgage market reflects industry realities, such as longer construction times, the rise in off-plan sales, and the increase in average property values. "As we see stabilization in the security situation alongside a gradual decrease in interest rates and the inflationary environment, the pent-up demand will break out, and the volume of transactions in the market will return to grow significantly," Lari concluded.