Apartment now, huge payment later: Israelis increasingly choose risky mortgage type

The mortgage lending market in Israel is growing, but experts are alarmed by a sharp rise in 'balloon loans' — loans with the principal repayment due at the end of the term. Over the past year, the volume of such loans has grown by about 20%, reaching 29.2 billion shekels in July 2026. The scheme allows borrowers to defer principal repayment but carries risks if their financial situation changes.

Over the past year, the mortgage lending market in Israel has grown, but experts are concerned about a key detail: Israelis are increasingly taking out so-called 'balloon loans' — mortgage loans with the principal repayment due at the end of the term. The volume of such loans has grown by about 20% over the year, significantly outpacing the overall mortgage portfolio. In July 2026, the total volume of loans with a large final payment reached 29.2 billion shekels. Monthly growth was 1.5%, quarterly growth 4%, and since the start of the year, it has increased by 2.2 billion shekels (8%). The scheme allows borrowers to defer principal repayment: for example, a buyer takes a balloon loan of 1 million shekels for two years, paying only interest, and then must repay the entire amount at once. In 2022-2024, the spread of such loans was facilitated by 80/20 programs, where the contractor paid interest until the apartment was handed over. The main risk is that the large payment does not disappear but is deferred to the future. If housing prices fall, income drops, or the bank refuses a standard mortgage, the borrower may face difficulties. Meanwhile, the average mortgage amount in July reached 1.2 million shekels, approaching the historical high of 1.3 million. The total mortgage volume in July was 11.56 billion shekels — the highest since December 2024.