Israeli mortgage banks have responded to recent interest rate cuts by increasing their profit margins on new mortgages, offsetting the benefits for borrowers. Data from the Darkenu mortgage advisory network reveals that while the banks' cost of raising money has dropped, the average profit margin charged to customers has risen by 37% over the past six months. This means the full effect of the rate cuts is not being passed on to those seeking new mortgages, making it harder for individuals to benefit from lower rates.

At the same time, more borrowers are opting for longer mortgage periods, with one in five now seeking the maximum term of 25 to 30 years, reflecting growing financial pressures on households. Nearly half of all new mortgages are being taken out with leverage exceeding 60% of the property's value, and the average mortgage size has surpassed NIS 1 million. The government has proposed a draft law to compensate eligible mortgage holders for part of the increased repayments caused by previous years' rate hikes, offering up to NIS 1,000 per month in assistance.