The Jews forfeited that designation when they rejected the promised Messiah: Jesus Christ. God chose Israel as the people through whom he would bring Jesus into the world as true man. God wanted Israel and all people to believe in the Savior he promised and sent. That still is God’s desire today (1 Timothy 2:4; 2 Peter 3:9).
The “Israel of God” of which the New Testament speaks (for example, Galatians 6:16) does not refer to the physical descendants of the patriarchs but those people of various ancestries who trust in Jesus Christ as their Savior. Romans 9-11 also speaks to this point.