Real-estate leverage: what it does to a household, both directions

Eleven at night, the kids asleep, and you're scrolling. A one-minute video: someone in a pressed shirt explains how they bought "a second flat with no down payment", with a chart that only goes up and a line that sticks: "let the bank's money work for you".

The video ends, and a quiet, uncomfortable thought stays behind: maybe we're the suckers. Everyone's doing this, and we still have one flat, one mortgage, and the fear.

If that fear is familiar, there is nothing broken in it. And the pull the video stirred isn't foolish either. Both are saying something true, and both deserve a hearing before any decision.

The argument inside you whenever leverage comes up

Part of you wants to build wealth. You don't want to be left behind while prices rise, and you watch others move ahead and ask why not us. That pull protects you from the feeling of missing out, and it is a real need.

Part of you remembers sleepless nights over the account. The month the mortgage payment went up, a stretch without work, the feeling of depending on the bank. That fear protects you from a big mistake, and it is a real need too.

The two old answers go to extremes: believe that "prices only go up" and "the rent pays the mortgage", or refuse all debt out of fear without quite knowing why. Neither lets you actually decide, because each looks in only one direction.

The bank's money: one mechanism, two directions

Leverage simply means part of the flat was bought with money that isn't yours. It does one thing, consistently: it magnifies every move in the flat's price relative to the money you put in. Every move, in both directions.

Why do we mostly see the one direction? Because a rise makes a better story, and a one-minute video picks the better story. On your side, Daniel Kahneman and Amos Tversky (1979) described how a loss hurts people more than a gain of the same size pleases them. That explains the part of you that is afraid: it isn't weak, it weighs a fall the way people do. It isn't your fault the picture you got was half a picture; it reached you that way. What was missing is the table's other column.

One round-number example: a flat at 2,000,000 ILS, and a 10% move in its price, 200,000 ILS up or down. The 10% is there because it is round, not because it is expected; it is an illustration, not a forecast. The example ignores interest, transaction costs and tax, to show only the mechanism.

Under Bank of Israel directives, as reported by Mashkanta Guru, the minimum equity is 25% for a first home, 30% for upgraders and 50% for an investment property (as of September 2026).

So what sits behind "a second flat with no down payment"? Usually the down payment is itself a loan, often secured on the first flat. That is leverage on top of leverage: two loans, two monthly payments, and none of your own money to absorb a move. As background only: according to Mako, all-purpose loans secured on a home rose 84% in a year (March 2026 against March 2025). The figure does not say why, and nothing here claims this is the reason.

Leverage risk, seen from the kitchen rather than the spreadsheet

The video talks in percentages. Your kitchen talks in monthly payments. So here leverage is tested through three budget questions, not through a market forecast.

What people in this position describe as their aim: three written answers on a page, before any conversation about another property, without guessing the market and without deciding from a video. Whether to borrow, when and how much is your decision.

Step 1: the payment against your free number. What the monthly payment would be, what's left of this month's free number after it, and what happens if the rate rises. In the block below you can move the loan amount or the number of years, and see the payment at the block's rate beside the payment if it rises by 2 percentage points. Assuming 1,500,000 ILS over 25 years, the payment is about 8,769 ILS a month at 5%, and about 10,602 ILS at 7%.

The monthly payment, and the payment if rates rise

Loan amount₪1,500,000

Years to repay25 years

Monthly payment

₪8,769

₪1,130,655 in interest over the whole loan

At 7% the payment would be ₪10,602

The rate here is an assumption for the example, not a forecast.

The 5% in the block is a round assumption, not a forecast. According to the Bank of Israel, its policy rate is 3.25% and the prime rate 4.75% (September 2026); check the current figure on the Bank of Israel site. The mortgage rate stress test article goes deeper on the "what if" line.

Step 2: how many months the cushion lasts. If the flat stands empty, or one salary stops: how many months of payments your savings cover with no rent coming in. One number, in months.

Step 3: what happens to your net worth in a fall. Take the matching row from the table and put in your own figures. Not to scare yourselves, but to know whether you can live with that row.

Step 4: what to do with the answers. If all three came easily, the next step is a conversation: before a loan decision, with a mortgage adviser or the bank; on an investment question, with a licensed investment adviser. If they didn't come easily, you know what to build first. Either way, the decision is yours.

The three questions for your page

• The monthly payment against this month's free number, including at a higher rate
• How many months the cushion covers the payment with no rent coming in
• What a 10% fall in price does to our net worth

0 of 3 done

In AlphaHome: the properties page shows how much of the flat is already yours, the monthly payment split into interest and principal, and the household's net worth. For an investment property it shows gross yield, net yield and cash-on-cash on the figures you enter. The investment apartment yield article explains what each one measures.

When prices in the neighbourhood jump

It will happen. The neighbours will say what they sold for, someone at a family dinner will work out aloud "how much you'd have made if you'd bought another one three years ago", and the thought from the video will come back, louder.

What you're looking at: their number is one row of the table, the rise. It is true, and it is half the picture.

What to do now: open the page with the three questions and update one answer. Maybe the cushion has grown, maybe the payment changed. That brings the conversation back from the neighbourhood to your home.

And next time: set one rule in advance: a decision on another property is made only after a week with the page. Not to stall, but so the decision comes from your budget rather than from the last conversation you heard.

Mortgage leverage, measured by your budget rather than a video

A decision made from a video will probably feel just like the last decision made from a video: quick at first, full of questions afterwards. Not because anything is missing in you, but because the same way of deciding tends to bring the same feeling.

Leverage magnifies every move, including the one you don't want, and your budget has to withstand both. Once that is clear, the fear stops being something to be ashamed of, and the pull stops being something to suppress. Both become questions on a page.

Next time a video like that comes up at eleven at night, you won't have to decide whether to believe it. You can put the three questions on your page to it, and see how many of them it even answers.

This week, write down your answers to the three questions: the payment against your free number, how many months the cushion lasts, and what a fall does to your net worth. Before any conversation about another property.