Mortgages Back Up to Pre-War Level in March

By Aryeh Stern

Mortgage lending in Israel’s residential real estate market reached pre-war levels in March, with new loans totaling NIS 6.2 billion. This amount aligns with the monthly average recorded during the first nine months of the previous year, as reported by the Bank of Israel. The statistics from the Bank of Israel precede the housing market surveys conducted by the Central Bureau of Statistics and the Ministry of Finance’s chief economist by one month.

The March figure for mortgage loans marks the highest level since August of the previous year, reflecting a significant recovery in the real estate sector over recent months, according to industry insiders. Although the chief economist’s transaction survey, which does not include data from March, indicated a considerable increase in new home purchases in the first two months of this year, the market for secondhand homes remained flat.

The surge in new home purchases can be attributed primarily to two factors. Firstly, developers are offering “20-80” financing plans, which require a 20% down payment at the time of contract signing and the remaining 80% upon delivery of the home, without index-linkage, effectively leading to a disguised price reduction not available in the secondhand market. Secondly, the lack of air raid-proof rooms or annexes in many secondhand apartments has deterred buyers in the current climate.

However, despite the increase in transactions, the market remains sluggish. The average monthly transaction count of 7,800 is still 15% below the multi-year average. While the total new mortgage loans in March were the highest in seven months, they were 8% less than in March 2023, 54% below March 2022, and 28% less than March 2021.

Detailed breakdowns of the mortgage loans, distinguishing between investors, buyers of subsidized homes, and non-investor open market buyers, will be released by the Bank of Israel in two weeks.