Mortgage comparisons

Kalatz vs Prime: fixed or Prime-linked mortgage track in Israel

Kalatz keeps the same rate and payment for the whole term, but usually starts higher and can carry an early-repayment fee. Prime follows the Bank of Israel rate (plus 1.5, plus your margin): cheaper to leave, but the payment moves.

CriterionKalatz (fixed, not CPI-linked)Prime (variable, not CPI-linked)
Rate behaviourThe same rate for the whole termBank of Israel rate + 1.5, plus or minus your margin; moves with every Bank of Israel decision
Monthly paymentNever changesChanges soon after each rate decision: up when rates rise, down when they fall
CPI indexationNone: the balance does not follow the MadadNone: the balance does not follow the Madad
Typical rate levelUsually higher than the starting rate on Prime; see today's rates pageUsually lower at the start, because banks give a margin below Prime; see today's rates page
Early-repayment feeCapitalization fee if average market rates have fallen below your rate (20% off after 3 years, 30% off after 5), plus the small operational feeNo capitalization fee; only the small operational fee (and 0.1% if you give less than 10 days' notice)
Main riskOverpaying if rates fall, and a fee to leave the trackPayment shock if the Bank of Israel raises its rate
66.66% variable-rate limitCounts as fixed: at least 33.34% of the loan must be fixedCounts as variable: all variable parts together may not exceed 66.66%

Which one should you choose?

Choose Kalatz for the part of the loan where you need certainty (at least a third of the loan must be fixed anyway). Choose Prime for the part you want to keep flexible and cheap to repay early, as long as your budget survives Prime rising by 2 to 3 points. Most Israeli mixes hold both.

How each track works

Kalatz (קל"צ, fixed and not linked to the Madad) fixes the interest rate and the monthly payment on the day you sign. Neither inflation nor the Bank of Israel can change them.

Prime (פריים) is the Bank of Israel policy rate plus 1.5 percentage points; the 1.5 is a bank convention, not a law. Your rate is Prime plus or minus a personal margin written in your contract, usually a discount (for example P−0.7). The margin stays the same; when the Bank of Israel moves its rate by 0.25, your rate moves by 0.25.

What it costs to leave

Prime has no capitalization fee, which is why borrowers can move it to another bank easily and banks compete for it. Kalatz is the opposite: if the Bank of Israel's average mortgage rate has fallen below your rate (and below the average on the day you borrowed, the lower of the two counts), you owe a capitalization fee. For example, on ₪800,000 at 5.3% with 18 years left and an average of 4.4%, the gross fee is about ₪63,400 before the 20% or 30% age discount.

If the average rate is above your rate, there is no capitalization fee. Timing matters: repaying a few days after your loan's 3-year or 5-year anniversary instead of before it can save real money.

How they fit in a mix

Bank of Israel Directive 329 caps all variable-rate parts together (Prime, Matz and every reset track) at 66.66% of the loan, so Kalatz, Katz or Zakaut must make up at least 33.34%. You cannot put the whole loan in Prime. Before choosing, test your budget with Prime 2 or 3 points higher; the Ribit simulator lets you change Prime and your margin.

Frequently asked questions

Is Kalatz or Prime cheaper over the whole loan?
It depends on where the Bank of Israel rate goes, which nobody knows. Prime usually starts lower, so it wins if rates stay flat or fall; Kalatz wins if rates rise a lot. Compare today's levels on the rates page and stress-test both in the simulator.
Can I take the whole mortgage in Prime?
No. Directive 329 limits all variable-rate tracks together to 66.66% of the loan, so at least 33.34% must be fixed (Kalatz, Katz or the Zakaut loan). Since 1 October 2026 the limit covers all credit from the same bank secured on the same property.
What does a Prime margin of P−0.7 mean?
Your rate is Prime minus 0.7 percentage points. The margin is agreed once and stays in the contract. If Prime falls by 0.25, your rate falls by 0.25 and the margin is still −0.7.
Can I refinance a Kalatz track without a penalty?
Not always. A capitalization fee applies only when today's average market rate is below both your loan's rate and the average rate when you took the loan; it is reduced by 20% once the loan is 3 years old and by 30% at 5 years. If the average rate is higher than yours there is no capitalization fee, and the state Zakaut loan never carries one.
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