What changed in Israeli mortgage rules on 1 October 2026?

Two limits now look at everything secured on the same property. The 66.66% variable-rate cap is checked against all housing credit at the same bank secured on that property, and the payment-to-income limit counts the payments of earlier loans on that property with more than 18 months left, whichever lender gave them. Nothing is cancelled retroactively; the new method applies to credit approved from 1 October 2026.

Does the October 2026 change affect me if I buy my first home?

If you buy your first home with one new mortgage, very little changes for you. It matters if you add a loan on a home that is already mortgaged, such as a top-up for renovation, an any-purpose loan or a partial refinance where part of the old mortgage stays.

Which mortgage tracks count as variable-rate under Directive 329?

Prime, Matz and every reset track count as variable, even one that is fixed for five years, because its rate can change during the loan. Kalatz, Katz and the Zakaut loan count as fixed, so at least 33.34% of a new mortgage must be fixed.

Do the new rules apply if I refinance my mortgage?

A full refinance that repays your whole mortgage is tested on the new loan alone, as before. A partial refinance or a top-up at the same bank is tested against everything secured on the home. A new loan at a second bank is tested only for that bank's credit on the 66.66% cap, but the payment-to-income test still counts the first mortgage's payments.

Israel Mortgage Rules from 1 October 2026

What changed on 1 October 2026

The Bank of Israel's Supervisor of Banks sets the core mortgage limits in Proper Conduct of Banking Business Directive 329 (הוראת ניהול בנקאי תקין 329). On 8 February 2026 the Supervisor issued circular 2840, which changed how two of those limits are calculated when you already have a mortgage on the property. The start date was first set for 1 July 2026. Circular 2852 of 30 June 2026 postponed it to 1 October 2026. Since that date:

The variable-rate cap (66.66%) is checked against all housing credit at the same bank secured on the same property, not only against the new loan.
The payment-to-income limit counts the monthly payments of earlier loans secured on the same property, whichever lender gave them, if they have more than 18 months left to run.
Nothing is cancelled retroactively. The new method applies to credit approved from 1 October 2026, including increases of amounts approved earlier.

If you are buying your first home with one new mortgage, very little changes for you. The change matters if you add a loan on a home that is already mortgaged: a top-up for renovation, an "any-purpose" loan (halva lekol matara), or a partial refinance where part of the old mortgage stays.

The variable-rate rule, explained

Section 7 of Directive 329 says a bank may approve a housing loan only if the variable-rate part is no more than 66.66% of the loan. A "variable-rate housing loan" is any loan, or part of one, whose interest may change during the life of the loan. In practice:

Variable: Prime (the Bank of Israel rate plus 1.5 points, plus or minus your bank's margin).
Variable: Matz (משתנה צמודה), CPI-linked tracks whose rate resets periodically.
Variable: every reset track, whether the rate changes every 1, 2.5, 5 or 10 years, CPI-linked or not. A track that is fixed for five years is still variable under the directive, because its rate can change during the loan.
Fixed: Kalatz (קבועה לא צמודה, fixed and not linked to the CPI).
Fixed: Katz (קבועה צמודה, fixed and linked to the CPI). CPI linkage does not make a fixed rate variable.
Fixed: the Housing Ministry eligibility loan (zakaut), which is fixed and CPI-linked.

So at least 33.34% of every new mortgage must be in fixed-rate tracks. There is no separate cap on Prime any more. Until the end of 2020 the directive also limited the part whose rate could change within less than five years, mainly Prime, to 33.33%. That clause was removed in the update dated 27 December 2020 (circular 2647). Since then Prime, Matz and all reset tracks share the single 66.66% limit. The bank also cannot schedule repayments so that the fixed part is paid off first: monthly repayments must stay proportional to the agreed mix, although you can still prepay any track.

What the 1 October change does to the 66.66% cap

Before October, a new loan was tested on its own. From 1 October 2026, the Bank of Israel's Q&A 5.1 says that when a bank approves new housing credit, or an increase, secured on the same property, the limit applies to the total credit at that bank secured on that property.

An example. Your mortgage at Bank A has ₪600,000 left: ₪150,000 in Kalatz and ₪450,000 in Prime and a 5-year reset track. That is 75% variable. It can happen after you prepay part of a fixed track. You ask Bank A for another ₪200,000. Under the old method, the new ₪200,000 could be up to ₪133,320 variable. Under the new method the total is ₪800,000, so variable credit may not exceed ₪533,280. You already have ₪450,000, so at most ₪83,280 of the new loan can be variable and at least ₪116,720 must be fixed. Fixed tracks usually mean a higher monthly payment.

The Q&A does not spell out whether existing credit is measured by outstanding balance or by the amount originally approved. Our example uses outstanding balances. Ask your bank which figure it uses.

The payment-to-income change can matter even more

The directive forbids a housing loan when the payment-to-income ratio (PTI) is above 50%. Above 40%, the bank must hold more capital against the loan, so in practice few banks lend there. PTI is computed on disposable income: net income minus fixed obligations with more than 18 months left, such as other loans and alimony, plus rent if you will not live in the home you are buying.

Until October, an existing mortgage was treated as an expense and deducted from income, and only the new loan's payment was compared with what was left. Now the existing payments go into the numerator, whether the old loan is at the same bank, another bank or a non-bank lender. Example: disposable income ₪20,000, existing mortgage payment ₪7,000 a month, new loan payment ₪3,500. Old method: ₪3,500 against ₪13,000, about 27%. New method: ₪10,500 against ₪20,000, 52.5%. That is above the 50% ceiling, so the loan cannot be approved in that form. A longer term or a smaller amount would be needed.

If you are refinancing or adding a loan

Full refinance (michzur) that repays your whole mortgage: the old loans disappear, so the test is on the new loan alone, as before.
Partial refinance or a top-up at the same bank: both rules now look at everything secured on the home. Ask the bank for a current balance statement so you can check the mix yourself.
A new loan at a second bank while the first mortgage stays: the 66.66% test covers only that second bank's credit, because the Q&A says "the same bank". The PTI test still counts the first mortgage's payments.
Before asking for a top-up, check your current variable share. If it is above 66.66%, the new money will have to be largely fixed.
Model both rules in Ribit's simulator: enter your existing tracks and the new loan as one mix to see the variable share and the combined monthly payment.

Also in 2026, and what stayed the same

From 8 February 2026, banks may lend up to 70% LTV on a loan secured on a home that is not used to buy property (an any-purpose loan), provided the part above 50% LTV is no more than ₪200,000. This was a wartime temporary relief and is now permanent.
From 30 June 2026, the directive states that it covers housing loans for a residential apartment in Israel. Credit to buy a home abroad that is not secured on an Israeli home is outside it. This is relevant if you are buying back in your country of origin.
Unchanged: maximum financing of 75% for a single home, 70% for a replacement home and 50% for an investment home, and a maximum term of 30 years.