In a supervisory analysis of the housing credit market, the Bank of Israel said housing credit continued to expand rapidly in 2025 even as housing market transactions declined, particularly purchases from contractors. It attributed part of this divergence to a longer gap between the signing of a home purchase transaction and the drawdown of the housing loan, which widened from about half a year on average in 2018–2022 to about eight months in 2025. The analysis links the wider timing gap to developers' financing incentives in recent years, which supported higher sales in 2024, and to longer construction periods. It also notes differences across buyer groups. First-time home buyers rely more heavily on bank housing loans than replacement-home buyers and investors, while some transactions by investors and replacement-home buyers are completed without a housing loan from the banking system. About 46 percent of loans are disbursed in several tranches, with drawdown completed in less than a year, and around 80 percent of monthly credit disbursements are the initial disbursement of a new loan. The Bank of Israel said the wider timing gap does not by itself indicate higher housing credit risk, but a longer period between purchase and financing completion increases uncertainty over loan pricing at completion and over the purchaser's ability to complete the transaction. As homes bought with financing incentives move closer to delivery and households are required to complete financing, the Bank of Israel expects housing credit growth to continue. The Banking Supervision Department said it will keep tracking developments to ensure risks in the housing credit portfolio are monitored and managed in line with accepted and sound risk management practices.
Bank of Israel 2026-05-12
Bank of Israel finds housing credit grew 7.4 percent as the purchase to loan timing gap widened to about eight months
The Bank of Israel reported that housing credit continued to grow rapidly in 2025 despite fewer housing transactions, with the average gap between purchase and loan drawdown widening to about eight months. It attributed this to developers’ financing incentives and longer construction periods, and noted differing reliance on bank housing loans across buyer groups. While the longer timing gap does not itself signal higher credit risk, the Bank highlighted increased uncertainty around final loan pricing and borrowers’ ability to complete transactions and said it will keep monitoring housing credit risks.