Mortgage Market Faces Slump Amidst Ongoing War - Lowest Figures Since October 2019

The conflict that erupted on October 7 has left its mark on the Israeli mortgage market, with a notable decline in mortgage activity. According to the Bank of Israel, the total amount of mortgages secured in the month coinciding with the commencement of the war was a mere 4.59 billion shekels. This figure not only represents the lowest volume since October 2019 but also falls below the rates observed at the onset of the COVID-19 crisis.

Lingering Effects and November Projections

Given that mortgage closings typically follow property purchases, the October statistics are influenced by transactions from September and preceding months. Consequently, experts anticipate a continued downturn in mortgage activity in November, as the real estate market experienced a near freeze in the preceding month.

Banks Respond with Payment Freeze Options

Recognizing the economic challenges posed by the ongoing conflict, banks have initiated measures to assist borrowers. The Bank of Israel has encouraged financial institutions to offer options for freezing mortgage payments for several months, aiming to alleviate the financial burden on existing borrowers.

Fluctuations in Recent Months

In recent months, the mortgage market exhibited fluctuations. August recorded a relatively healthier figure of approximately 7 billion shekels, which saw a slight dip to 5.5 billion shekels in September. This contrasts with the previous low in April, when the total mortgages amounted to only 4.612 billion shekels.

A Look at Historical Peaks and Lows

Highlighting the volatility of the mortgage market, the record high occurred in March of the previous year, registering an impressive 13.432 billion shekels in monthly mortgages. However, this was just one month before the initiation of a series of interest rate increases in Israel.

As the nation navigates through the challenges posed by the ongoing conflict, the mortgage market faces a period of uncertainty. The combination of external factors and the concerted effort by banks to support existing borrowers adds complexity to the economic landscape, leaving stakeholders closely monitoring developments in the coming months.