Bank of Israel Reportedly Weighs Extending or Revising Developer-Loan Limits

Israel's banking supervisor is considering whether to extend or revise temporary restrictions on developer financing for home purchases, according to a report published on November 8. The existing measure is due to expire on December 31, 2026. The reported deliberations concern arrangements that allow buyers to pay a small amount initially and defer much of the purchase price. The Bank of Israel's final circular, issued on April 6, 2025, requires a 150% risk weight for qualifying credit to residential construction projects when more than 25% of their sale contracts defer a substantial payment until delivery. The circular defines those deferred-payment transactions as contracts in which more than 40% of the price is postponed until delivery. A separate restriction limits developer-subsidized bullet or balloon mortgages to 10% of a bank's housing-loan execution in each calendar quarter. These are loans in which the developer pays some or all of the interest. The quarterly limit appears in the final regulation signed by Supervisor of Banks Daniel Hahiashvili. The Banking Supervision Department said buyers could enter transactions even though their “ability to complete the transaction is uncertain.” Its circular took effect upon publication and includes an exception for qualifying approvals in principle issued beforehand. The current report describes consideration of an extension or changes, rather than an approved replacement for the rules scheduled to expire at the end of this year.