In recent years, the volume of housing loans (mortgages) issued by banks in Israel has significantly increased.Banks, as a system, lend out every dollar deposited with them multiple times.Let's assume a person buys an apartment. For the purchase, they take out a mortgage of half a million shekels. The seller of the apartment, in turn, receives the same half a million shekels and deposits it in the bank. This creates a situation where the bank has a borrower who owes it half a million shekels and, on the other hand, has another half a million shekels in the bank's vaults (or effectively in the bank's computers). Thus, the bank takes that same half a million shekels and lends it again to another borrower, and so on. In fact, every shekel that exists in the bank can be rolled over multiple times, during which process the bank owes money to those who deposited money with it (as mentioned, for all its rollovers) and simultaneously the bank creates more and more people who owe it money and pay it every month.There are two scenarios that can endanger the bank:Borrowers will not be able to make payments and will not pay money to the bank.Many account holders will ask for their money from the bank all at once.To avoid these risks, the bank is required to set aside a portion of the money with each additional recirculation. That is, after the bank has lent out half a million shekels and it has been redeposited with them, they cannot lend out the entire sum again but must keep a portion of the money.The Bank of Israel’s directive increased the amount that banks are required to set aside; in the Bank of Israel’s words, banks must set aside a larger amount for doubtful debts on mortgages exceeding 50% in financing.In other words, the Bank of Israel views loans with more than 50% in financing as risky and therefore requires the bank to set aside a higher proportion of funds in its reserves for these loans.It is expected that the bank will pass on the costs associated with its requirement to set aside provisions for doubtful debts to its customers, thereby raising interest rates on loans with a financing rate above 50%. According to the Bank of Israel, unlike previous measures, this step is not intended to reduce demand for mortgages and thus lower housing prices. The purpose of this step is to improve bank stability and their ability to withstand extreme scenarios.