Mortgage Demand Plummets to 4-Year Low Amidst War and Economic Challenges

The demand for mortgages in Israel has experienced a significant decline, reaching its lowest point in four years, according to data released by the Bank of Israel. The October figures, totaling only NIS 4.5 billion, reflect a 29% decrease from the monthly average over the past year and a 25% drop compared to the same month last year.

While the recent conflict has undoubtedly played a role in this downturn, other factors have contributed to the mortgage market's sluggish performance. The holiday of Sukkot, known for traditionally dampening activity in the mortgage sector, coincided with the first week of October. Additionally, the market has been grappling with weakened activity over the past year due to rising interest rates, further dampening demand.

The war, with its disruptive impact on economic activities—ranging from the massive recruitment of reservists to the uncertainties prompting apartment buyers to suspend transactions—has exacerbated the already challenging conditions. Industry experts suggest that the true repercussions of the conflict on the market may unfold in the coming months, as mortgage deals typically take time to advance.

Despite an increase in risk levels and yields on long-term government bonds, October saw only a marginal uptick in mortgage interest rates. For instance, the interest rate on non-linked fixed mortgages with a leverage exceeding 60% rose to 5.05%, up from 4.95% in September. In contrast, mortgages with a leverage lower than 60% remained unchanged at 5.07%, mirroring September's rates.

As the nation grapples with the aftermath of the war and economic uncertainties, the mortgage industry anticipates a prolonged impact on the market, emphasizing the need for careful monitoring and strategic planning in the months ahead.