Mortgages in Israel: Arrears Climb Back Up to NIS 4.23B in September

The Israeli mortgage market is sending mixed signals right now. On one hand, households keep borrowing at high volumes. On the other, repayment arrears are climbing once again. On October 22, 2026, Globes published the Bank of Israel's latest data—figures that matter for any borrower, whether buying from abroad or already living in Israel, when putting together a financing plan.

September by the numbers

Why are arrears climbing back up?

Based on Bank of Israel data reported by Globes, the summer dip came from banks working flat out to restructure deals with struggling borrowers. Lenders eased off that effort in September, pushing overdue balances right back up. Does this mean the market is in freefall? Not necessarily. But it proves those financial headaches haven't gone anywhere.

A market that refuses to slow down

At 8.66B ₪, September fell short of earlier months, though calendar quirks played a big part: the Tishrei holidays meant significantly fewer working days. Globes sees this as an impressive performance under the circumstances, and the Bank of Israel expects a jam-packed October as backlogged files get processed.

How Much Are Buyers Actually Borrowing?

Investors take out larger loans—mainly because they target higher-end assets and bring more personal equity to the table, giving them access to higher financing. On the flip side, buyers entering subsidized programs get capped purchase prices, which significantly trims down their borrowing requirements.

What this means for your financing plan

Build a safety buffer into your monthly payments

Borrowers in trouble are almost always those who stretched their monthly budget to the absolute limit. Give yourself some breathing room. What if variable interest rates jump? What if you face an unexpected income gap or a developer delay that forces you to pay rent and a mortgage simultaneously? Run the numbers with our financing simulator.

Watch out for last-minute band-aids

Trouble often hits right when settling the final balance on an off-plan property—especially with deals requiring 20% at the purchase agreement signing and 80% on handover. If your bank turns down that remaining balance, you might be tempted by predatory non-bank loans. Verify your borrowing capacity before signing, and map out your cash flow with our payment schedule simulator.

Falling behind? Act immediately

The summertime dip in mortgage arrears proves one thing: lenders are open to negotiating. Taking the initiative and contacting your bank—ideally alongside your mortgage broker—gives you real room to maneuver. Wait until you have already defaulted, and your options shrink drastically.

Diversify your mortgage tranches

An Israeli mortgage typically splits across several tracks: fixed-rate, variable pegged to the Prime rate, and sometimes CPI-linked. Each reacts differently to Bank of Israel decisions and inflation trends. Over-allocating to a single track spikes your risk. A good broker must show you how every scenario impacts your monthly payment over time, not just pitch a flashy introductory rate.

Buying From Abroad vs. Locally

For Israelis Already Living in Israel

The published average figures give you a solid benchmark. If your financing needs exceed 1.07M ₪ for a primary home, double-check that your debt-to-income ratio stays well within Bank of Israel caps. Bad timing on selling your previous property can also create unnecessary pressure: take a look at our article on the tax deadline for selling an existing home.

For Overseas Buyers

Israeli banks apply specific rules to non-residents, especially regarding down payment minimums and documenting foreign income. Currency risk comes on top of interest rate fluctuations: earning in dollars or euros to pay off a mortgage in shekels means your monthly payment moves with the FX market. Shifting political dynamics—broken down in our analysis of the upcoming elections and housing—can make these swings even sharper.

Working With the Right Team

When buying a new build, the total bill adds up: an 18% VAT included in the price tag, closing costs ranging from 10% to 13%, and purchase tax (Mas Rechisha), which depends on your buyer profile. Securing your investment comes down to three essential professionals: lawyer · mortgage broker · architect. The broker shops around the banks to build a sustainable financing plan, the lawyer vets the purchase agreement and payment milestones, and the architect inspects the property inside out. Looking for broader context? Read our weekly market recap.

IsraelStart lists 300+ new developments across Israel. Request your tailored assessment with zero obligation.

Sources

- Globes — After three months of decline, mortgage arrears tick back up (22/10/2026)
- Globes — Fresh Treasury data reveals mounting pressure on households moving home (25/10/2026)
- Nadlan Center — Real estate and construction indices on the Tel Aviv Stock Exchange drop amid political uncertainty (28/10/2026)