Israeli Developers Launch Aggressive Financing Campaigns Amid Sluggish Market
Major Israeli developers are rolling out aggressive financing campaigns, allowing buyers to defer large sums or purchase homes without upfront equity. Regulators face mounting challenges as financing incentives surge back to 30% of new apartment sales.
Roughly 85,000 new apartments are currently awaiting buyers in Israel, as developers continue to pursue aggressive and creative strategies to stimulate sluggish sales. Meanwhile, the Bank of Israel—the regulatory body tasked with maintaining financial stability—has largely chosen to refrain from intervention for the time being. This comes roughly two years after it declared war on developer financing promotions, imposed strict limitations, and saw the supervisor of banks warn that the phenomenon was expanding and carrying growing risks.
Two major residential construction firms rolled out new financing solutions this week. Gindi Holdings announced it will allow buyers to defer a payment of 900,000 shekels from the apartment price for a decade following occupancy through a balloon loan. Simultaneously, Aviv Melisron is offering purchasers the option to mortgage an existing property to finance the entire initial down payment, with the company covering all interest expenses up until occupancy.
Developers Find Workarounds
These maneuvers highlight the extent to which developers continue tailoring financing incentives to market realities, while also raising questions regarding the risks buyers assume and the efficacy of Bank of Israel restrictions against new structural models.
CPA Aviv Ropel, head of the Economics and Management Department at the Max Stern Yezreel Valley College, warns that regulations have thus far focused primarily on the technical attributes of loans. Restrictions introduced by the Bank of Israel in March 2025 mandated a 150% capital allocation requirement for project financing where more than 40% of the apartment's price is deferred, alongside capping developer-subsidized balloon loans at 10% of mortgage volumes. However, Ropel cautions that such a pursuit is a game the regulator is bound to lose, noting that developers continually discover ways to restructure deals to comply with new rules.
Data recently published by the Ministry of Finance indicated that financing incentives rebounded in August to capture 30% of new apartment sales, exceeding pre-restriction levels. Treasury officials noted that while the frequency of reported incentives dipped to 20% of contractor sales in the free market back in May 2026, it has surged over the past three quarters.
Buying Without Upfront Cash
Returning to the new promotional packages, Aviv Melisron launched a financing campaign earlier this week under the headline "Purchasing a new apartment without the need for equity." Under this framework, the company enables buyers to secure a bridging loan secured by an existing property they own, with the firm absorbing all financing and interest costs until the occupancy date. Consequently, purchasers can acquire a new home without deploying liquid equity at the initial transaction stage.
This structure caters to several buyer profiles: housing upgraders can mortgage their current residence to purchase a new one prior to selling; investors can leverage an existing asset as collateral instead of liquidating investments or savings; and first-time buyers lacking real estate can utilize a first-degree relative's property, such as parental assets. Upon occupancy, buyers are required to repay the loan.
Two days following Melisron's announcement, Gindi Holdings introduced a competing campaign entitled "The Big Bang." The company is offering a deferral of 900,000 shekels of the apartment price for ten years post-occupancy, completely interest- and linkage-free.
This offer applies to roughly 300 apartments across four developments. Buyers will pay 20% of the purchase price upon contract signing and the remaining balance upon receiving keys, minus the 900,000 shekel deferred amount. The deferred portion will be financed via a balloon loan from Bank Leumi or Mizrahi-Tefahot, with Gindi covering the interest payments. Purchasers must undergo standard credit underwriting by the respective bank to establish repayment capacity.
Amplified Leverage and Risks
Both campaigns share a common denominator: alleviating the need for liquid equity at the onset of the transaction while targeting high-demand districts where property prices and required equity thresholds are elevated. For instance, roughly half of Gindi's participating units are located in the Glil Yam project in Herzliya, while Melisron's initiatives span sought-after neighborhoods in Tel Aviv, Ramat Aviv, Givatayim, and Herzliya. In this sense, firms are seeking to combat both market stagnation and the difficulty prospective buyers face in amassing required capital.
Mortgage advisor Yonatan Berliner notes that Melisron's campaign represents another evolution in developer loans, extending into higher-priced assets. He warns that investors and first-time buyers relying on parental property mortgages face increased leverage and heightened exposure. Berliner cautions that borrowers needing to refinance the loan post-occupancy may find it classified under Bank of Israel rules as a multi-purpose loan rather than a standard mortgage, carrying substantially less attractive terms and interest rates.
Ropel points out that Gindi's offering constitutes a tangible economic benefit: subsidizing interest on a 900,000 shekel loan for a decade, assuming a 5% interest rate, equates to roughly 350,000 shekels in present value. Nevertheless, he warns this may create an illusion that the debt has vanished, whereas ten years later buyers must settle the full 900,000 shekel sum in a single payment. Those unable to source the funds independently will be forced to refinance, potentially adding 5,900 to 7,100 shekels monthly to their household expenses over 15- or 20-year amortizations, alongside existing mortgages.
According to his assessment, the promotion suits buyers meeting four cumulative conditions: having a scheduled, dated liquidity event in eight to ten years—such as the release of an Advanced Training Fund or pension monies, the sale of another asset, or an expected exit; intending to reside in the property long-term without refinancing; verifying full property values via independent appraisers rather than seller comparative tables; and securing written advance guarantees regarding continued interest subsidies should developers encounter financial distress. Conversely, the campaign is ill-suited for buyers planning to await maturity while simply hoping favorable financial conditions will materialize.
The Bank of Israel declined to comment.
