Israeli Mortgage Market Sees Average Decrease in March Despite Recovery in Activity

March saw a surprising turn in the Israeli mortgage market, with the average mortgage amount decreasing significantly despite a reported recovery in market activity. Data released by the Bank of Israel indicates a notable decline in the average mortgage compared to previous months, marking the lowest figure since the beginning of 2022.

Key Figures:

• The average mortgage in March stood at NIS 918,000, reflecting a 3% decrease from February's average of NIS 949,000.
• Recent months had seen the average mortgage hovering around NIS 950,000, reaching almost NIS 1 million in December.
• Despite the decrease in the average mortgage amount, the volume of new mortgages taken out in March was relatively high compared to previous months.

Possible Explanations:

• Real estate prices have been on the rise in the last two months, indicating a disconnect between mortgage amounts and property values.
• Sources within the banking system suggest that the decrease in the average mortgage figure may be attributed to a change in the mix of real estate transactions, with increased activity in peripheral areas where property prices are lower compared to central regions.
• The surge in activity in the southern regions, driven by programs for residents, may have contributed to the decline in the average mortgage amount.

Market Activity:

• Despite the decrease in the average mortgage, the volume of mortgages taken out in March was NIS 6.23 billion, marking the highest monthly amount since August of the previous year.
• This surge represents a notable increase of 16% compared to February, indicating sustained momentum in the mortgage market despite fluctuations in average mortgage amounts.

The unexpected decrease in the average mortgage amount in March underscores the complexity of factors influencing the Israeli real estate market. While market activity remains robust, changes in transaction mix and regional preferences are reshaping borrowing patterns, highlighting the need for nuanced analysis in understanding market dynamics.