Prime is a number everyone shares. Your margin is yours.
Almost every Israeli mortgage has a Prime track (מסלול פריים). Prime (פריים) is a reference rate: the Bank of Israel (בנק ישראל) policy rate plus 1.5 percentage points. The Bank of Israel cut its rate to 3.25% in a decision published on 1 September 2026, effective 3 September 2026, so standard Prime is 3.25% + 1.5% = 4.75%. The 1.5 point add-on is a market convention that banks follow, not a number set by law.
Your bank does not lend you money at exactly Prime. The Prime track is priced at Prime plus a personal margin (מרווח), and the Bank of Israel states plainly that this margin can be negative or positive. A negative margin is a discount from Prime; a positive one is a premium. The margin is agreed once, written into your contract, and stays with the loan. When the Bank of Israel moves its rate, Prime moves and your rate moves with it by the same amount.
How to read it on an offer
Israeli banks write the Prime track as P−0.7, P+0.3, "Prime minus 0.7" or פריים פחות 0.7. Read it like this:
- P−0.7 today means 4.75% − 0.7 = 4.05% per year.
- If the Bank of Israel cut its rate by 0.25 point, Prime would become 4.50% and the same loan would cost 3.80%. Your margin of −0.7 would not change.
- P+0.3 today means 5.05%. A plus sign means you pay more than Prime.
- Each 0.1 point of margin costs about ₪28 a month on a ₪500,000 Prime track over 25 years at today's rate, or about ₪8,300 over the life of the loan.
One trap: the Bank of Israel publishes its rate comparisons as effective annual rates (ריבית שנתית מתואמת), which include monthly compounding, while offers show the nominal margin. A 4.05% nominal rate is about 4.13% effective. Compare like with like.
What is normal right now
We converted the Bank of Israel's published August 2026 averages for the Prime track (variable, not linked to the Madad, the consumer price index) into a margin against that month's Prime of 5.00%. The banking-system average was about −0.71. The bank averages ranged widely:
- First International: about −1.07
- Leumi: about −0.73
- Hapoalim: about −0.70
- Mizrahi-Tefahot: about −0.67
- Discount: about −0.65
- Mercantile: about −0.54
- Bank of Jerusalem: about +0.84
These are averages over many borrowers, not offers. Your own margin can sit above or below your bank's average. The Bank of Israel's separate table of contractual margins shows the same picture: −0.74 in August and −0.73 in September 2026. The system average has been negative every month since September 2021. About 21% of new mortgage money in August 2026 went into the Prime track.
What decides your margin
No bank publishes a formula, and there is no official points system. The Bank of Israel's research names borrower risk, the bank's operating costs and its market power as the forces behind mortgage pricing. In practice, these are the levers a bank looks at:
- LTV, the loan-to-value ratio (שיעור מימון). The legal maximum is 75% for a single home, 70% for a replacement home and 50% for an investment property or a buyer who is not an Israeli citizen. A loan at 50% of the price is safer for the bank than one at 75%, and is often priced better.
- Your repayment burden, PTI (שיעור החזר מהכנסה): the monthly payment as a share of your disposable income. Above 40%, the bank must hold the loan at a 100% risk weight under Directive 329 (הוראה 329), which ties up more of its capital. The Bank of Israel warns that such loans are high risk and expected to cost the borrower more. Above 50% the loan is prohibited.
- How stable and well-documented your income is. Only regular, documented income paid into your account counts at all.
- Loan size. A larger loan is more profit for the same paperwork, so banks may compete harder for it.
- The rest of your mix. A bank can trade a deeper Prime discount against higher rates on its fixed tracks, such as Kalatz (קל״צ, fixed and not linked to the Madad). Look at the whole offer, not one line.
- How much of the loan is in Prime. All variable-rate parts together (Prime plus every track that resets) may not exceed 66.66% of the loan, so at least a third must be fixed. There has been no separate cap on Prime since 27 December 2020.
- Your relationship with the bank, for example a salary account there, and your credit history.
- Competition. A bank that knows you hold another offer has a reason to improve its own.
How to negotiate
The Bank of Israel's mortgage transparency rules are on your side. You can request an approval in principle (אישור עקרוני) online from each bank, and the bank must answer within 5 to 7 business days. Every approval uses the same layout and must include three uniform baskets (סלים אחידים), mixes defined by the Bank of Israel that are identical at every bank, plus the mix the bank proposes for you. That makes offers comparable line by line.
- Ask at least three or four banks. A study by the Competition Authority, cited by the Bank of Israel, found that one competing offer lowers the price by 7 to 8 basis points on average, and four lower it by 16 to 20 basis points (100 basis points = 1 percentage point).
- Compare the Prime margin and the whole basket: the total expected interest (ריבית כוללת חזויה), the first monthly payment and the highest expected payment are printed on every approval.
- Show each bank the best competing offer, in writing, and ask them to match the margin.
- Watch the clock. An approval in principle is valid for 24 days. During that time the bank is bound by its terms, provided your details check out; a Bank of Israel rate change moves Prime but keeps the approved margin.
- Improve the levers you control: a larger down payment lowers LTV, and a longer term or paying off other loans lowers PTI.
In the ribit simulator
The simulator prices the Prime track as Prime plus a margin. By default it uses −0.71, the August 2026 system average. When a bank gives you an offer, enter your own margin and every payment and total in the simulator updates to match.