Approximately 85,000 new apartments are currently awaiting buyers in Israel, and developers continue to seek creative and aggressive ways of jumpstarting sluggish sales. At the same time, the Bank of Israel, the regulator tasked with maintaining the stability of the financial system, has for the time being opted to remain largely on the sidelines. This comes roughly two years after the central bank declared war on developers’ financing schemes and imposed restrictions on them; at the time, the Supervisor of Banks warned that the phenomenon "is intensifying and carries an increase in risk."
Two major residential development firms unveiled new financing solutions this week: Gindi Holdings will allow buyers to defer payment of NIS 900,000 of the apartment's purchase price for ten years following occupancy, by means of a "balloon loan." Aviv Melisron offers buyers the option of mortgaging an existing property to finance the entire initial payment for the purchase, with the company bearing the interest costs until the new property is ready for occupancy.
"The developers find a way"
These moves illustrate the extent to which developers continue to adapt their financing offers to market realities. However, they also raise questions about the risks assumed by buyers, as well as about the effectiveness of the Bank of Israel’s restrictions and their ability to address these new models.
CPA Aviv Rufel, head of the Department of Economics and Management at the Max Stern Yezreel Valley College, warns that regulation has thus far focused primarily on the technical characteristics of the loans. Among other measures, restrictions imposed by the Bank of Israel in March 2025 mandated a 150% capital allocation for project financing where more than 40% of the apartment's price is deferred. Additionally, the volume of "balloon" loans subsidized by developers was capped at 10% of total mortgage originations. "This kind of chase is a game that the regulator is destined to lose from the start. Developers are finding ways of restructuring transactions so that they comply with the new regulations."
The Ministry of Finance recently presented data indicating that, in August, financing incentives once again accounted for 30% of sales in the new-apartment market, a level higher than before the imposition of restrictions. The ministry noted that the prevalence of reported incentives had dropped to 20% of total developer sales in the open market in May 2026, but had since surged.
An apartment with no upfront capital
Earlier this week, Aviv Melisron launched a financing scheme under the headline "Buy a new apartment without equity." Under this arrangement, the company enables buyers to secure a bridging loan by mortgaging an existing property; the company then covers the financing costs and interest payments until the date of occupancy. In other words, buyers can acquire a new apartment without having to provide personal equity from liquid assets at the outset.
This framework is designed for several types of buyers: move-up buyers can mortgage their current home to purchase a new one before selling the former; investors can use an existing property as collateral for a loan, rather than liquidating other investments or withdrawing savings; and first-time homebuyers can utilize an apartment of a first-degree relative, for example, their parents. Following occupancy, the buyers will be required to repay the loan.
Two days after the promotion launched by Aviv Melisron, Gindi Holdings rolled out a different campaign with the ambitious name "The Big Bang." As mentioned, the company is offering to defer payment of 900,000 shekels of the apartment's price for ten years following occupancy-interest-free and without linkage.
The promotion applies to about 300 apartments in four projects. Under this structure, buyers pay 20% of the apartment's price upon signing, with the remainder due upon receipt of the keys, minus NIS 900,000, which is deferred for ten years. This deferred amount is financed via a "balloon loan" (a loan with a single lump-sum repayment at the end) from Bank Leumi or Mizrahi Tefahot Bank, with Gindi covering the interest payments. Buyers must undergo an underwriting process at the bank, which will assess their ability to repay the loan.
Increased leverage
Both promotions are designed to reduce the need for buyers to make down payments at the start of the transaction. Furthermore, both apply to projects in high-demand areas, where apartment prices, and consequently the equity required for a purchase, are high. About half of the Gindi apartments included in this promotion are in a project in Glil Yam, Herzliya, while the projects by Aviv Melisron are in sought-after neighborhoods in Tel Aviv, Ramat Aviv, Givatayim, and Herzliya.
Mortgage consultant Yoni Berliner notes that the promotion offered by Aviv Melisron represents a further evolution of developer loans, which are now extending to higher-priced properties. According to him, for investors and first-time homebuyers who leverage their parents' apartment as collateral, this entails increased leverage and exposure to additional risk. Berliner warns that because of Bank of Israel regulations, those who need to refinance the loan after occupancy may find it classified as a general-purpose loan rather than a standard mortgage; such loans come with significantly less attractive terms and interest rates.
Rufel points out that Gindi is offering a genuine financial benefit: assuming an interest rate of 5%, subsidizing the interest on a NIS 900,000 loan for a ten-year period is worth roughly NIS 350,000 in present value. However, he cautions that this may create the impression that the debt issue has been resolved, whereas, in reality, at the end of the ten years, the buyers will be required to repay the NIS 900,000 principal. Anyone unable to secure the funds from another source will be required to refinance the loan. This could increase the monthly repayment by NIS 5,900-7,100 in addition to their existing mortgage.
In his assessment, this offer may be suitable for buyers who meet all of four conditions: they have a known, dated liquidity event occurring in eight to ten years, such as the release of funds from an advanced study fund or a pension plan, the sale of another asset, or an anticipated exit; they intend to reside in the apartment for the long term and not to refinance the loan; they verify the full price of the apartment through an independent appraiser, rather than relying on the seller’s comparison chart; and they obtain prior written confirmation that the interest rate subsidy will continue even if the developer encounters financial difficulties. Conversely, this offer is not suitable for those who plan simply to wait until the repayment date, hoping for the best and assuming they will somehow have an additional NIS 900,000 available.
The Bank of Israel provided no comment.
Published by Globes, Israel business news - en.globes.co.il - on November 4, 2026.
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