Static memory in python: do loops create new instances of variables in memory?

I've been running Python scripts that make several calls to some functions, say F1(x) and F2(x), that look a bit like this:

x = LoadData()

for j in range(N):
    y = F1(x[j])
    z[j] = F2(y)

    del y

SaveData(z)

Performance is a lot faster if I keep the "del y" line. But I don't understand why this is true. If I don't use "del y", then I quickly run out of RAM and have to resort to virtual memory, and everything slows to a crawl. Buy if I use "del y", then I am repeatedly flushing and re-allocating the memory for y. What I would like to do is have y sit as static memory, and reuse the memory on every F1(x) call. But from what I can tell, that isn't what's happening.

Also, not sure if it's relevant, but my data consists of numpy arrays.