Written and professionally reviewed by the Ailon Financing Solutions team
August 2026 snapshot
The Bank of Israel interest rate stands at 3.5%, and therefore the prime interest rate stands at 5%. The next decision is expected to be published on September 1, 2026. The current source is p The Bank of Israel's monetary policy tool.
The interest rate on the personal mortgage is not necessarily equal to the prime rate. It is determined according to the route, the loan period, the financing rate, the quality of the portfolio and the interest rate tender between the banks.
Bank of Israel restrictions that apply to the mortgage
| carrier | the limit |
|---|---|
| Financing rate for a single apartment | up to 75% of the property's value |
| Financing rate in a replacement apartment | up to 70% of the property's value |
| Financing rate in an investment apartment | up to 50% of the value of the property |
| rate of return from income | up to 50% of disposable income |
| maximum period | 30 years |
| Variable interest rate | up to two thirds of the loan |
The binding source is Order of proper banking management 329, which was updated in June 2026.
How much monthly repayment should you take?
The 50% limit is not a target. is a regulatory red line. The Bank of Israel notes that a significant portion of the loans are given at a repayment ratio of about 30% to 40% of the income, and that over 40% the loan is considered more risky.
For example, in a household with a net income of NIS 25,000 and fixed liabilities of NIS 2,000, the disposable income for the test is about NIS 23,000. A refund of NIS 8,050 reflects 35% of disposable income. A refund of NIS 11,500 already reaches the regulatory ceiling.
You can check the numbers on a calculator How much mortgage can you take?.
Why the first return is not the whole story
In the prime route, the interest rate can change with each interest rate decision. In a linked track, the fund index and the payment are affected by the increase in the price index. In the variable route, the interest rate is updated at the stations specified in the contract.
Therefore, you need to check three numbers:
- The first repayment according to the current interest rate.
- The return in the scenario of an interest rate increase and linkage.
- Total expected payment throughout the period.
calculator Mortgage and settlement schedule showing all three.
How to choose a period
Shortening the period increases the monthly repayment but decreases the total interest. Extending the period lowers the refund now, but could add hundreds of thousands of shekels over the years.
The right period is the shortest one that can be met even in a weak month, without relying on a bonus, overtime or uncertain income.
What to do before contacting the bank
- Calculate equity and separate transaction expenses from it.
- Determine target return and maximum return for the household.
- Obtain an in-principle approval from several banks based on identical data.
- To build a mix that fits the plans in the next five to ten years.
- Conduct an orderly interest rate tender and compare the total cost, not just a single route.
The sources on which the guide is based
- Monetary Policy Tool, Bank of Israel, interest effective August 2026.
- Order of proper banking management 329, June 2026 version.
- The reform of transparency in mortgages, Bank of Israel.
The data is correct at the time of the update. An interest rate decision or regulatory change may change them.
