Compare mortgage tracks (maslulei mashkanta) across Israeli banks, calculate monthly payments for mixed-track portfolios, and understand Bank of Israel regulations including LTV limits and CPI-linked caps. Use when a user needs to evaluate mortgage offers from different banks, calculate refinancing savings, or understand how Prime rate changes affect their payments. Covers Leumi, Hapoalim, Discount, Mizrachi-Tefahot, FIBI, Mercantile, and Yahav. Do NOT use for commercial real estate loans, business credit lines, or non-Israeli mortgage products.
The Israeli mortgage system is unique. Unlike most countries where you take a single loan at one rate, Israeli mortgages are composed of multiple parallel tracks (maslulim), each with different interest rate mechanisms. A typical mortgage combines 3-5 tracks to balance risk and cost.
The 5 main mortgage tracks:
Prime (ריבית פריים) - Variable rate linked to the Bank of Israel prime rate. Currently prime = Bank of Israel rate + 1.5%. Changes whenever the central bank adjusts its rate. Expressed as "Prime minus X%" (e.g., Prime - 0.5%).
Fixed Non-Linked (קבועה לא צמודה) - Fixed interest rate, not linked to CPI. The safest track: your payment never changes for the entire loan period. Typically the highest starting interest rate.
Fixed CPI-Linked (קבועה צמודה למדד) - Fixed interest rate but the principal is linked to the Consumer Price Index (madad). Lower starting rate than fixed non-linked, but your outstanding balance grows with inflation.
Variable CPI-Linked (משתנה צמודה למדד) - Variable interest rate (resets every 5 years) and principal linked to CPI. Double exposure: both rate changes and inflation adjustments.
Variable Non-Linked (משתנה לא צמודה) - Variable interest rate (resets every 5 years), not linked to CPI. Rate adjusts periodically but no inflation linkage.
Bank of Israel imposes strict regulations on mortgage composition. These are critical for comparison:
Loan-to-Value (LTV) limits:
Track composition limits:
Payment-to-income ratio:
Collect the following to enable accurate comparison:
Design 3-4 different track combinations that comply with Bank of Israel regulations. Here are common strategies:
Conservative Mix (low risk, higher initial payment):
Aggressive Mix (lower initial payment, more risk):
Balanced Mix:
Anti-Inflation Mix (minimizes CPI exposure):
Request quotes from at least 3-4 banks. The major mortgage lenders in Israel:
Tier 1 Banks (largest market share):
Tier 2 Banks:
Specialized:
For each bank, create a comparison table:
| Track | Bank A Rate | Bank B Rate | Bank C Rate | Bank D Rate |
|---|---|---|---|---|
| Prime | P - ___% | P - ___% | P - ___% | P - ___% |
| Fixed Non-Linked | ___% | ___% | ___% | ___% |
| Fixed CPI-Linked | ___% | ___% | ___% | ___% |
| Variable CPI-Linked (5yr) | ___% | ___% | ___% | ___% |
| Variable Non-Linked (5yr) | ___% | ___% | ___% | ___% |
For each track combination at each bank, calculate:
Per track:
Total mortgage:
Calculation formula for each track: Monthly payment = P * [r(1+r)^n] / [(1+r)^n - 1] Where: P = principal for this track, r = monthly interest rate, n = number of monthly payments
For CPI-linked tracks, the outstanding balance increases with CPI monthly. The effective cost is significantly higher than the nominal interest rate suggests when inflation is high.
Many borrowers focus only on the monthly payment, but the total cost of the mortgage is what matters:
Create a summary comparison:
| Metric | Bank A | Bank B | Bank C |
|---|---|---|---|
| Monthly payment (year 1) | |||
| Monthly payment (year 10, projected) | |||
| Total interest (30 years) | |||
| Total CPI cost (2% inflation) | |||
| Total CPI cost (3% inflation) | |||
| Total cost of mortgage | |||
| Early exit penalty (after 5yr) |
Mortgage advisor (yoetz mashkantaot):
Direct bank negotiation:
Mechir LaMishtaken (מחיר למשתכן):
First-time buyer benefits:
For users with existing mortgages considering refinancing:
Every Israeli mortgage requires:
Life insurance (bituach chaim):
Property insurance (bituach mivne):
Additional closing costs:
User says: "I'm buying my first apartment for 2,500,000 ILS. I have 700,000 ILS saved for a down payment. My wife and I together earn 25,000 ILS net per month. We got offers from Leumi and Mizrachi-Tefahot."
Actions:
Result: User receives a comprehensive comparison showing monthly payments, total costs, and risk profiles for each bank's offer across multiple track combinations, plus a recommended strategy for negotiation.
User says: "I took a 1,200,000 ILS mortgage 5 years ago at Hapoalim. My remaining balance is about 1,050,000. My Prime track is at Prime-0.3% and my fixed track is at 4.5%. Mizrachi offered me Prime-0.7% and fixed at 3.8%. Should I refinance?"
Actions:
Result: User receives a detailed savings analysis showing monthly savings, total lifetime savings, break-even month, and whether refinancing is worthwhile after accounting for all penalties and costs.
User says: "I want to buy a second apartment for investment (hashkaa) for 1,800,000 ILS in Beer Sheva. I already own my primary residence."
Actions:
Result: User receives the LTV constraint analysis, total acquisition cost (including higher purchase tax), mortgage payment projections vs. expected rental income, and a comparison of bank offers for investment property mortgages.
| Source | URL | What to Check |
|---|---|---|
| Bank of Israel (BOI) | https://www.boi.org.il | Current BOI interest rate, Prime rate decisions, announcements |
| BOI banking supervision | https://www.boi.org.il/en/economic-roles/supervision-and-regulation/supervision-of-the-banking-system/ | LTV limits, multi-track requirement, supervisory caps |
| Bank of Israel credit data | https://www.creditdata.org.il | Free annual credit report lookup at the BOI credit bureau (BDI) |
| Mechir LaMishtaken | https://www.gov.il/he/departments/topics/mehirlmishtaken | Reduced-price apartment eligibility and entitlement rules |
| mashkanta.co.il calculators | https://www.mashkanta.co.il | Multi-track payment calculators that account for CPI linkage |
Cause: Banks evaluate more than just LTV. Common rejection reasons include: payment-to-income ratio exceeding the bank's internal threshold (varies 35-40%), insufficient employment history (banks typically want 12+ months at current employer for salaried, 2+ years of tax returns for self-employed), negative credit history at the Bank of Israel credit bureau (BDI), or existing debt obligations that push the total debt ratio too high.
Solution: Request a detailed rejection reason from the bank (they are required to provide one). Check your credit report at the Bank of Israel credit data system (available free once a year). If the issue is income ratio, consider a longer loan term to reduce monthly payments, adding a guarantor (arev), or increasing the down payment. If employment history is short, wait and reapply, or try a bank that has more flexible policies for your employment type. Some banks are more lenient with high-tech salaried employees even with shorter tenure.
Cause: Many borrowers underestimate the impact of CPI linkage on their mortgage. When inflation runs at 3-4% annually, the outstanding balance on CPI-linked tracks grows significantly. For example, a 500,000 ILS CPI-linked track at 3% inflation grows to ~672,000 ILS after 10 years before any principal payments. The "low interest rate" on CPI-linked tracks is misleading because it doesn't include the inflation cost.
Solution: Always calculate the total cost of CPI-linked tracks under multiple inflation scenarios (2%, 3%, 4%). Compare the total cost (interest + CPI adjustments) against fixed non-linked tracks. In high-inflation environments (Israel averaged 3-4% in recent years), fixed non-linked tracks often end up cheaper despite their higher nominal interest rate. Consider reducing CPI exposure by allocating more to fixed non-linked and Prime tracks, staying well below the 66.67% CPI maximum. Use spreadsheet calculations or online mortgage calculators (like the one at mashkanta.co.il) that properly account for CPI linkage.
Cause: In Israel, early repayment of fixed-rate mortgage tracks incurs a penalty if the current market rate for the same remaining term is lower than your locked rate. The penalty compensates the bank for the interest income they lose. The calculation is based on the differential between your rate and the current market rate, multiplied by the remaining balance and remaining term, discounted to present value. This can amount to tens of thousands of shekels on large fixed-rate tracks.
Solution: Check if your fixed-rate track is approaching a rate-reset date (for variable tracks) or if market rates have risen above your locked rate (in which case there's no penalty). Consider partial repayment strategies: pay off the Prime track first (no penalty ever), then variable tracks at their reset dates (no penalty on reset date). For fixed tracks, wait for a period when market rates rise above your locked rate, then refinance. Some newer mortgage agreements have capped penalties; check your original mortgage agreement (hskem halvaah) for the penalty clause.
Cause: The Prime rate itself is uniform across all banks (Bank of Israel rate + 1.5%). However, the spread (the discount or premium to Prime) differs between banks and between borrowers. When a bank offers "Prime - 0.65%," the 0.65% discount is what varies. Some confusion arises because banks may quote an "effective rate" that combines the Prime rate with their spread, and the Prime rate itself changes periodically.
Solution: Always compare the spread to Prime, not the effective rate. If Bank A offers P-0.5% and Bank B offers P-0.7%, Bank B is cheaper by 0.2% regardless of what the current Prime rate is. Track Bank of Israel rate decisions (announced roughly every 6 weeks) at boi.org.il. Remember that Prime track payments will change with every rate decision, so stress-test your affordability with Prime at +1% and +2% above current levels.