Bringing Order to the Market: Israel Sets New Regulations for Mortgage Advisors

Israel is taking a long-awaited step to protect homebuyers: the government has approved a new bill that will require all mortgage advisors to be licensed, trained, and regulated for the first time. In a market where many borrowers rely on advisors to navigate complex loan structures and negotiate rates, the absence of oversight has left families vulnerable. The new law aims to introduce professional standards, ethical guidelines, and consumer safeguards—bringing much-needed transparency and accountability to one of the most significant financial decisions Israelis make.

Taking a mortgage is one of the biggest financial decisions most families will ever make. Borrowers often spend much of their adult lives repaying a loan taken years earlier. In Israel, 65% of borrowers turn to a mortgage advisor to help secure the right loan products from the right bank at the right rates. When it comes to foreign buyers, this number is significantly higher.

The mortgage advisor is trusted implicitly to guide clients through complex decisions. Yet until now, anyone could open an office and call themselves a mortgage advisor—with no background check, no licensing, no formal education, and no certification. Families were entrusting their financial futures to individuals who might have started yesterday.

Why Oversight Was Needed

Israeli loan products and the mortgage process are far more complicated than in most countries. Borrowers must navigate:

• Multiple loan tranches
• Inflation-linked mechanisms
• Prepayment penalty considerations
• Loan term limits based on age
• A lack of long-term rate locks

This complexity is precisely why families hire advisors. Astonishingly, the profession has remained unregulated until now. And unlike the U.S., where borrowers receive standardized disclosures such as the Good Faith Estimate or Loan Estimate to make “apples-to-apples” comparisons, Israel offers no such consumer protection mechanisms. Here, the mortgage process resembles a Middle Eastern bazaar: no posted prices, no uniform terms, and nearly everything subject to negotiation.

The New Regulation

Two weeks ago, the Knesset took a decisive step toward professionalizing the mortgage advisory sector. A new bill, approved by the Ministerial Committee for Legislation, will require all mortgage advisors to be licensed and registered in a national registry.

The Ministry of Justice will be responsible for drafting and implementing the law, ensuring that the profession is finally brought under proper oversight. Key elements of the reform include:

• Certification Exams & Education: Advisors must undergo formal training and pass exams.
• Disciplinary Oversight: A committee with authority to impose fines or revoke licenses.
• Unified Code of Ethics: Standards to ensure transparency and protect consumers.
• Mortgage Advisors Council: A professional body to oversee exams and advise the Justice Minister.
• Transitional Arrangements: Pathways for veteran advisors to adapt to the new system.

Learning from the U.S. Experience

The United States once faced the same problem. Before 2008, mortgage originators operated with little oversight, and many borrowers were steered into risky loans without clear disclosures. When the subprime mortgage crisis hit, the lack of professional standards was seen as a contributing factor. In response, Congress passed the SAFE Act of 2008, creating the Nationwide Mortgage Licensing System (NMLS). Later, the Dodd-Frank Act reinforced these requirements, mandating licensing, registration, and stronger consumer protections.

Israel is, in many ways, learning from America’s painful lesson. The U.S. only enacted licensing after the crash; Israel is acting proactively to protect families and stabilize the market before a crisis forces its hand.

The Next Front: Private Lenders Under Scrutiny

Just yesterday, the Capital Markets Authority announced it is examining the practices of private lending companies—non-bank lenders not subject to Bank of Israel oversight. The inquiry focuses on whether these lenders are illegally paying mortgage brokers for loan origination.

Unlike banks, which are strictly forbidden from compensating third parties on any loan, some private lenders are allegedly offering brokers payments tied to the interest rate charged. In other words, the higher the rate a client pays, the more money the broker earns.

This echoes troubling dynamics from the U.S. pre‑2008, when broker incentives often ran counter to consumer interests. While the investigation is still in its early stages, it underscores that mortgage brokerage in Israel is anything but boring. With regulation now in motion and scrutiny expanding to private lenders, the industry is entering a new era—one where transparency, accountability, and consumer protection must finally take center stage.

What This Means for Foreign Buyers

For foreign buyers, this reform is particularly significant. Navigating the Israeli mortgage system is challenging even for locals—let alone for buyers abroad who are unfamiliar with the language, banking culture, and unique loan structures. Until now, many overseas buyers relied heavily on mortgage advisors to bridge knowledge gaps, often without knowing whether those advisors had any formal training or regulatory oversight.

With the introduction of licensing and professional standards, foreign buyers will benefit from greater reliability, transparency, and confidence in the professionals guiding them. The reform reduces the risk of misinformation, hidden incentives, and inconsistent practices that have historically complicated the mortgage process for overseas clients.

In practical terms, this means that foreign purchasers can expect clearer explanations of loan options, more accurate comparisons between banks, and better protection throughout the approval process. Ultimately, the new regulatory framework strengthens trust and enhances the overall experience for anyone abroad seeking to finance a home in Israel—making the path to ownership far more secure and predictable than ever before.