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The Prime Rate Today
The most up-to-date figure, directly from the Bank of Israel - and a full guide to understanding the prime track in your mortgage.
What is the prime rate and how is it calculated?
The prime rate is one of the most common base rates in mortgage tracks in Israel, and is also used for many types of loans, including non-bank loans. Its formula is fixed and well known: prime rate = Bank of Israel rate + 1.5%. The fixed 1.5% margin was set many years ago and is uniform across all banks in Israel - so the prime rate is always the same at all financial institutions, and the only difference between them is how much of the prime track each bank is willing to approve in your mix.
The Bank of Israel rate, on the other hand, is set by the Bank of Israel's Monetary Committee, and reflects the central bank's monetary policy against the economy's inflation and growth targets. Every change in the Bank of Israel rate is automatically translated into an identical change in the prime rate, on the same day.
Why does the prime rate change?
The Bank of Israel's Monetary Committee convenes several times a year (usually about 8 rate decisions a year, on a schedule published in advance) and decides whether to raise, lower or leave the rate unchanged. The decision is based mainly on inflation data, the exchange rate, the state of the labor market and the pace of the economy's growth. As soon as a new rate decision is published, the prime rate is updated automatically according to the fixed formula - with no need for a separate decision by the banks.
How does the prime rate affect the monthly mortgage payment?
The prime track in a mortgage is almost always a variable-rate track: your monthly payment is recalculated every time the prime rate changes, so it rises when the Bank of Israel raises the rate, and falls when the Bank of Israel lowers it. For example, a rise of 0.25% in the Bank of Israel rate makes the monthly payment on every NIS 100,000 of remaining principal slightly more expensive, but cumulatively - the actual effect depends on the remaining principal and the number of years left to repay. Because of this uncertainty, most mortgage mixes in Israel combine a prime track with fixed or CPI-linked tracks, to balance the relatively low cost of prime against the stability of other tracks. You can estimate the exact effect on your mix in the monthly payment calculator.
The prime track versus other mortgage tracks
Prime track
- Rate change:
- Changes with every Bank of Israel rate decision (about 8 times a year)
- Payment stability:
- Low - the monthly payment can rise or fall frequently
- Suitable for:
- Those who want flexibility, or expect early repayment or refinancing in the near future
Fixed non-indexed track
- Rate change:
- Does not change throughout the term of the loan
- Payment stability:
- Very high - the monthly payment is known in advance from day one
- Suitable for:
- Those who prefer full certainty and long-term budget planning
Fixed CPI-linked track
- Rate change:
- The rate is fixed, but the principal is linked to the consumer price index
- Payment stability:
- Medium - the payment changes with inflation, not with the Bank of Israel rate
- Suitable for:
- Those who want a relatively low rate and are willing to absorb index changes
Variable track every 5 years
- Rate change:
- Updates at points in time set in advance, not with every rate decision
- Payment stability:
- Medium-high - stable between updates
- Suitable for:
- Those who want a compromise between the low starting rate of prime and stability
The history of the prime rate in Israel
The prime rate has tracked the Bank of Israel rate throughout its history, and has gone through various periods of increases and decreases in line with the economic cycles in the Israeli and global economy. Those interested in full historical data and charts of the changes over the years can find them on the official Bank of Israel website. What is important to remember in the context of mortgage planning: the prime rate can always move in both directions, and a mix that is built correctly takes this variability into account in advance, and not only the current figure.
How much prime it is worth taking in your mix, and how to combine it with other tracks - this is exactly the question we help answer in the initial consultation. You can also start with our complete mortgage guide, which explains all the stages of the process and the tracks.
Frequently asked questions about the prime rate
What is the prime rate today?
The current figure is displayed at the top of this page and refreshes automatically against the official Bank of Israel source, so it always reflects the current rate - the Bank of Israel rate plus a fixed margin of 1.5%.
How is the prime rate calculated?
The formula is fixed: prime rate = Bank of Israel rate + 1.5%. The 1.5% margin is uniform across all banks in Israel and does not change; the only component that changes is the Bank of Israel rate itself, with every rate decision.
How many times a year does the prime rate change?
The prime rate is updated every time the Bank of Israel's Monetary Committee makes a new rate decision - usually about 8 times a year, according to the schedule the Bank of Israel publishes in advance.
Is the prime rate the same at all banks?
Yes, the prime rate itself is the same at all banks in Israel, because it is derived directly from the Bank of Israel rate plus a uniform margin of 1.5%. The differences between banks show up in the share of the prime track each bank approves in the mix, not in the level of the rate itself.
Is it worth taking a mortgage on the prime track?
It depends on your risk profile and your plans. The prime track suits those who want flexibility and are willing to absorb changes in the monthly payment, and suits less those who need full certainty in their cash flow. In most cases it pays to combine prime as part of a broader mix, and not as a single track for the entire amount - which is exactly the work a mortgage advisor does with each file.
What is the difference between the prime rate and the Bank of Israel rate?
The Bank of Israel rate is the base rate set by the central bank's Monetary Committee. The prime rate is a commercial derivative of it, used by banks and financial institutions to price loans and mortgages, and it is always equal to the Bank of Israel rate plus 1.5%.
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