- June 23, 2026
- 8:19 pm
- Israel
Fresh data from Bank of Israel for the first quarter of 2026, published on June 23, 2026, shows a picture that cannot be called panicky, but it is also difficult to call it calm. Private debt of the non-financial sector — that is, business and household debts, excluding financial companies — increased by about 56 billion shekels in just three months and reached about 2.5 trillion shekels.
For the average reader, this figure may sound too abstract. But it is precisely in this that the nerve of the Israeli economy is visible: companies are taking more bank loans, the construction sector is actively dependent on the debt market, and families continue to enter into mortgages, even when consumer loans are almost not growing.
This is not government debt and not a budget deficit. This is how the real economy lives: business, banks, construction companies, apartment buyers, families with mortgages, and people who count payments every month.
What the Bank of Israel showed
According to the Bank of Israel, in the first quarter of 2026, the total debt of the non-financial private sector increased by about 2.3%.
In absolute numbers, this is about 2.5 trillion shekels — a huge amount that is divided between two main groups: business and households.
Business debt reached about 1.6 trillion shekels. Household debt increased to about 914 billion shekels. At first glance, this may look like ordinary economic activity: companies borrow money, people buy housing, banks lend, the market continues to operate.
But what is important is not only the growth of debt itself but its structure. Israel is not just taking more loans. It is taking them differently: business increasingly relies on banks, and citizens almost do not increase consumer loans but continue to increase mortgages.
That is why for NANews — Israel News this topic is important not as dry financial statistics, but as a question of everyday sustainability: jobs, housing prices, family payments, and the economy’s ability to withstand military and political pressure.
Business increasingly depends on banks
Corporate debt in the first quarter of 2026 increased by about 46 billion shekels and reached about 1.6 trillion shekels. It is especially noticeable that the main source of growth was bank loans.
The annual growth rate of bank lending to businesses approached 20%. For comparison, non-bank debt grew by only about 0.9%. This means that companies are increasingly going to banks for live money, rather than just redistributing old debts or using alternative sources of financing.
A loan in itself is not a problem. For business, borrowed funds can be a normal development tool: purchases, construction, working capital, salaries, expansion of activities. But in the conditions of Israel in 2026, this is no longer just an economic issue.
The country lives in a reality of war, high security expenses, political pressure, and uncertainty around the budget. In such a situation, business dependence on banks becomes a risk factor. As long as banks are willing to lend, the system breathes. But if they start to be cautious, tighten conditions, or reassess risks, some companies may quickly feel a lack of money.
The problem is not the loan itself. The problem is that the loan becomes the main oxygen for the economy.
Why builders are at the center of risk
Separately in the Bank of Israel’s data, the corporate bond market stands out. In the first quarter of 2026, businesses issued bonds for about 18 billion shekels. This is below the average for previous quarters, which was about 22 billion shekels.
But even more important is another thing: about 54% of these issues were accounted for by real estate and construction companies.
This means that the construction sector remains one of the most dependent on debt financing. Developers depend on several factors at once: the availability of bank credit, the ability to issue bonds, demand for apartments, mortgage opportunities for buyers, and overall market confidence.
As long as the market is calm, this works. Moreover, the spread between corporate bonds from the Tel Bond 60 index and government bonds decreased from about 0.85 to 0.75 percentage points in April–May. That is, investors are not yet showing panic and are ready to take risks.
But it is precisely this calmness that requires attention. If apartment sales slow down, banks become more cautious, and refinancing becomes more expensive, construction and development companies may be the first to come under pressure. Not because the crisis has already begun, but because their model is especially sensitive to the cost of money and buyer confidence.
Citizens are not taking more for living — they are taking more for housing
With households, the picture looks different. The total debt of citizens increased by about 10 billion shekels and reached about 914 billion shekels. But the main detail is that consumer loans have almost not grown.
Debt not for housing — these are loans for current needs, purchases, card overdrafts, personal loans — remained at about 251 billion shekels. That is, Israelis do not look like people who are massively borrowing money for vacations, equipment, or everyday consumption.
All the growth was in housing.
Housing debt increased to about 663 billion shekels. New mortgage loans in the first quarter of 2026 amounted to about 30 billion shekels, that is, about 10 billion shekels per month. In April–May, the volume of new mortgages was slightly lower, but still remained high — about 9 billion shekels per month.
This is a very important signal. Consumer credit has frozen, but the mortgage engine continues to work.
For many families in Israel, an apartment is not just a purchase, but the main financial decision of life. People enter into a mortgage for years ahead, taking on an obligation that depends on income, employment, rates, and the overall stability of the economy.
Why this is important for an ordinary family
As long as salaries are stable, the mortgage is serviced. As long as a person works, as long as the family does not lose income, as long as payments fit into the budget, the debt seems controllable.
But if the economy starts to slow down, if layoffs appear, reduction of hours, income falls, or mandatory expenses increase, the mortgage payment quickly turns from a planned budget item into a source of pressure.
Here it is important to understand: the problem is not that people buy housing. The problem is that in conditions of high living costs and high uncertainty, the mortgage becomes an increasingly heavy obligation.
If rates do not decrease quickly, the burden will remain. If housing prices do not rise as buyers expect, some families may find themselves in a situation where the debt is already taken, but confidence in the future is less.
Why this is dangerous right now
The Bank of Israel’s data does not indicate an immediate debt crisis. They do not show a collapse of the banking system, panic in the bond market, or a mass refusal of households to make payments.
But they show something else: the margin of safety is becoming more expensive, and dependence on credit is deeper.
The Israeli economy is not currently living in a normal business cycle. It is under pressure from military expenses, security issues, political instability, the cost of living, budget decisions, and uncertainty of external agreements. In such an environment, debt statistics become not only financial but also social.
For business, the risk is that banks may tighten conditions. For construction companies — that refinancing will become more expensive, and buyers more cautious. For families — that mortgage payments will remain high, even if incomes stop growing.
For the state, the problem is broader: an economy that grows at the expense of borrowed funds requires stability. And stability in Israel in 2026 is no longer a technical forecast, but a political and military issue.
What can go wrong
The first risk is that banks will start to lend to businesses more cautiously. Then companies accustomed to accessible money will face a lack of working capital.
The second risk is that construction and development companies will come under pressure due to expensive refinancing and weaker sales.
The third risk is that apartment buyers will become more cautious, and the mortgage market will start to cool down.
The fourth risk is that the labor market will stop supporting the previous level of family incomes. For people with mortgages, this could be the most painful scenario.
The fifth risk is that government spending and inflationary pressure will not allow for a quick easing of the cost of money.
What is currently holding the system
For balance, it is important to say: Israel does not look like an economy that has already fallen into a debt crisis. The banking system still maintains stability. The bond market does not show panic. Consumer debt of citizens has not exploded. Most of the mortgage debt does not carry currency risk. Business continues to receive financing.
That is why the situation is dangerous not as a sudden collapse, but as an accumulation of risk beneath the surface.
On the outside, everything may look calm: banks are working, loans are being issued, apartments are being bought, bonds are being placed. But inside, the system is becoming more sensitive to any deterioration — rates, war, budget, labor market, housing sales, and investor confidence.
For NANews — Israel News, the main conclusion here is not that a crisis will come tomorrow. The main conclusion is that every new shekel of debt becomes part of a big picture: how long can the economy maintain stability if it increasingly needs credit oxygen.
Israel is not yet in an open debt crisis. But the country is entering a period where private debt becomes a question not only for banks and statisticians but for every family, every employer, and every apartment buyer.
The main question now is not how much more Israel can borrow. The main question is what will happen if an economy accustomed to credit oxygen suddenly feels its lack.