Gov't drops mortgage subsidy plan

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Sources inform «Globes» that the government has halted the legislation for subsidizing mortgage borrowers whose monthly repayments rose sharply with the rise in interest rates in the past few years. The plan, initiated by National Economic Council chairperson Prof. Avi Simhon, was approved by the government in March. A further discussion of it in the ministerial legislation committee was postponed at the last minute a week ago, and was due to have taken place today. But with the new timetable forced by the Knesset elections being brought forward, the proposal will not now return to the agenda and will not be promoted in the current Knesset.

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Last week, coalition chairperson MK Ofir Katz put forward a bill to dissolve the Knesset which, if passed, will mean an election earlier than the original time of late October. Ministry of Finance officials warned that the mortgage subsidy plan had no budgetary source of finance, and that it was liable to cost up to NIS 10 billion over five years. The Bank of Israel published an unusually strongly worded position paper in which it described the plan as «devoid of economic logic,» and as a move that was liable to harm Israel’s credibility as a developed economy, while the Deputy Attorney General warned of possible breach of the principle of equality.

In addition, paying grants out of public funds close to an election could be in breach of the Attorney General’s guidelines on election economics.

The bill formulated by Simhon calls for a monthly grant to be paid to the owner of a sole home who took a mortgage loan before the end of 2022 on which the monthly repayments have risen steeply. The grant was to have been up to 75% of the real rise in the monthly repayment, up to NIS 1,200 per household.

Published by Globes, Israel business news — en.globes.co.il — on May 19, 2026.