Mortgage comparisons

Fixed-rate vs variable-rate mortgage tracks in Israel

Fixed-rate tracks (Kalatz, Katz, Zakaut) keep their rate for the whole loan; variable-rate tracks (Prime, Matz, tracks that reset every 1 to 10 years) can change it. Bank of Israel rules require at most two thirds variable, so at least a third fixed.

CriterionFixed-rate tracks (Kalatz, Katz, Zakaut)Variable-rate tracks (Prime, Matz, reset tracks)
Rate behaviourSet at signing and unchanged until the last paymentPrime follows each Bank of Israel decision; reset tracks change only on their reset dates (every 1 to 10 years), from government bond yields plus the bank's margin
Payment predictabilityKalatz payment never changes; on Katz and Zakaut the balance, and so the payment, follows the MadadCan rise or fall when rates move; plan for the payment after a rise, not the first payment
Typical starting rateUsually higher than variable tracks; see today's rates pageUsually lower at the start; see today's rates page
Early-repayment feeCapitalization fee on Kalatz and Katz if average rates have fallen; none on the Zakaut loanNone on Prime; on a reset track only the small operational fee if you repay on a reset date
Main riskOverpaying if rates fall, and paying a fee to leavePayment shock if rates rise (and on Matz, inflation as well)
Directive 329 limitAt least 33.34% of the loan must be fixedAt most 66.66% in total, counting Prime, Matz and every reset track together
Best suited toTight budgets, long horizons, borrowers who want certaintyBorrowers with spare income, a plan to repay early, or an expectation of falling rates

Which one should you choose?

Lean towards more fixed if your budget has little room for a higher payment or you value certainty. Lean towards more variable if you have spare income, expect rates to fall, or plan to repay or refinance early. Within the rules the split is yours, as long as at least 33.34% is fixed.

What counts as fixed and what counts as variable

Directive 329 treats a track as variable if its interest rate can change during the loan. Variable: Prime, Matz (variable and CPI-linked) and every reset track, whether the rate changes every 1, 2.5, 5 or 10 years. A track that is fixed for five years is still variable under the directive.

Fixed: Kalatz, Katz and the state Zakaut loan. CPI linkage does not make a fixed rate variable: Katz is fixed, even though its balance follows the Madad.

The legal split

All variable parts together may not exceed 66.66% of the loan. On a ₪1,200,000 loan at most ₪799,920 may be variable, so at least ₪400,080 must be fixed. Three equal parts of ₪400,000 in Kalatz, Prime and Matz miss the limit by ₪80, because the variable share is 66.67%.

Since 1 October 2026 the test covers all housing credit from the same bank secured on the same property, not only the new loan.

How to choose your split

Stress-test the payment, not the first month. Ask what happens if Prime rises by 2 or 3 points, and for reset and CPI-linked tracks, what the payment looks like after the first reset and with 4% inflation. Banks rarely approve a payment above 40% of disposable income, so leave room.

A common approach is to take only the fixed share you need for peace of mind (the legal minimum is a third) and keep the rest in Prime or a reset track that you can leave cheaply. The simulator shows the payment and total cost of each mix under several rate scenarios.

Frequently asked questions

What is the minimum fixed share of an Israeli mortgage?
33.34% of the loan. Directive 329 allows at most 66.66% in variable-rate tracks, so the rest must be Kalatz, Katz or the state Zakaut loan.
Is a track that resets every 5 years fixed or variable?
Variable. Even though the rate is fixed between resets, it can change during the loan, so it counts towards the 66.66% limit together with Prime and Matz.
Is Katz a fixed-rate track even though its payment rises?
Yes. The interest rate on Katz never changes, so it counts as fixed for the Bank of Israel limit. The payment still rises with the Madad because the balance is CPI-linked.
Can I repay a variable-rate track without a fee?
Largely yes. Prime carries no capitalization fee, and a reset track repaid on its reset date carries only the operational fee (up to ₪60). Give at least 10 days' notice to avoid the 0.1% short-notice fee.
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