Israel’s latest rate cut should have made borrowing instantly cheaper. Instead, homeowners and analysts woke up to conflicting prime-rate signals across the system. Some pages look updated. Others look stuck in the prior world. The gap is not a mystery. It is fast-moving pricing colliding with slow-updating rate tables.
The quiet shift that changes your mortgage math
- The central bank’s move lowered the baseline for variable-rate borrowing.
- Prime, the benchmark many mortgages reference, is meant to follow mechanically.
- Bank marketing pages can reflect changes faster than published tables.
- Mixed numbers right now are a timing issue, not a new formula.
Bank of Israel cuts the policy rate and shifts the baseline
On January 5, the Bank of Israel lowered its benchmark policy rate to 4.00%, trimming it by 25 basis points, or 0.25 percentage points. The move followed easing inflation into the official target range and a stronger shekel. For borrowers, it resets the baseline that many variable loans key off.
The policy rate is the interest rate set by Israel’s central bank. It influences short-term funding costs and ripples into bank pricing.
In practical terms, a lower policy rate usually pulls down the reference rates used in mortgages, consumer credit, and business lending. The speed of pass-through depends on the product and the bank.
Why does prime look different depending on where you check?
Prime is the benchmark lending rate many Israeli mortgages reference, and it moves when the central bank moves. It is commonly calculated as the Bank of Israel rate plus a fixed 1.5 percentage points, so a policy-rate cut should flow through mechanically. The confusion comes from timing: live pricing can update faster than rate tables.
Some sources reflect the new direction immediately. Others lag because they are maintained as separate tables, updated on different schedules, or tied to “as-of” dates.
This matters because borrowers do not shop in theory. They shop across screenshots, bank pages, and aggregator snapshots. When those disagree, trust takes the hit, even if the underlying mechanics are unchanged.
Leumi markets a discounted prime while other tables lag
Bank Leumi moved quickly to market a customer benefit that prices prime at 5.5% for eligible borrowers, explicitly framed as 0.25% lower than the economy’s prime. The offer presents prime at 5.5% instead of 5.75% for those who qualify, effectively showcasing faster pass-through than some published tables.
The important nuance is scope. A marketing benefit can be customer-specific, product-specific, or conditional. It can show up before every “official” rate box across a site updates.
For consumers, that means the number you see first may not be the number you get. The decisive figure is the quote tied to your loan’s margin over prime.
What does a quarter-point move mean for households?
A 25-basis-point drop sounds like pocket change, but prime-linked mortgages are long-duration contracts. Even a small move can change the payment you feel each month, especially on large balances. The exact impact depends on the loan term and whether you amortize or pay interest-only.
Illustrative math, using standard amortization:
A quarter-point reduction on a 1,000,000 NIS loan over 25 years lowers the monthly payment by about 150 NIS, assuming the rate change fully passes through and stays flat.
If the loan were interest-only, the first-month interest would drop by about 208 NIS per 1,000,000 NIS of balance. These figures are illustrative, not a promise of what any specific bank will apply.
A practical rule for pricing models and mortgage calculators
For anyone building pricing models, the safe assumption is that prime will track the policy rate with a one-for-one pass-through, but published tables can lag. The result is mismatched data across bank pages and aggregators. Treat the cut as a baseline shift, then validate the live quote with the bank offering the loan.
When data sources disagree, do not average them. Pick a hierarchy.
Start with the central bank decision for direction. Then use the lender’s most current customer-facing quote for execution. If a table looks stale, flag it as stale instead of forcing false precision.
Comparison snapshot
| Where the signal comes from | What it reflects right now |
|---|---|
| Bank of Israel rate decision | The baseline for variable-rate pricing moved lower. |
| Prime calculation convention | The formula stays the same, but the displayed number can lag. |
| Bank marketing pages | Customer-facing offers can show pass-through before tables update. |
| Published index and rate tables | Some sections may still show pre-cut figures until refreshed. |
| Market and aggregator snapshots | Fast to react, but not a substitute for a bank-specific quote. |
Quick checklist for borrowers and analysts
- Confirm whether your mortgage has a prime-linked component and what margin applies.
- If two pages disagree, rely on the bank’s current quote tied to your product, not a generic table.
- When updating a calculator, shift prime in line with the policy move and add a “last verified” date.
- Ask the bank if any advertised “special-rate” is automatic or conditional.
Glossary
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Policy rate: The central bank’s benchmark interest rate that anchors short-term pricing in the economy.
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Basis point: One hundredth of a percentage point, used to describe small rate moves.
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Prime rate: A benchmark lending rate commonly used as a base for loans and mortgages in Israel.
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Spread: The fixed margin added to a benchmark rate to produce your personal loan rate.
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Rate table: A published list of reference rates that may update slower than live offers.
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Special-rate offer: A bank benefit that can adjust pricing for eligible customers without changing every published table.
Methodology
This report is based strictly on the provided news text and cross-checked against the Bank of Israel’s January 5, 2026 press release, a Reuters report on the decision, and current bank reference pages describing prime-rate conventions and special-rate pricing.
FAQ
Is prime in Israel a new system, or the same one with a new number?
It is the same system. Prime is still described as the Bank of Israel rate plus a fixed margin, and it is meant to move when the policy rate moves.
Why would a bank show a special rate before other pages update?
Marketing pages and product offers can be updated faster than institutional tables. Different teams and update cycles can produce temporary mismatches.
Is a “special-rate” prime the same as the economy’s prime for everyone?
Not necessarily. A special rate can be conditional on eligibility, product type, or internal criteria. Always confirm it is tied to your loan quote.
Should I trust aggregators when bank pages disagree?
Aggregators can be useful for direction, but your binding number comes from your bank’s quote and your margin over prime.
How should I update a mortgage calculator today?
Update prime in line with the policy-rate move, add a clearly visible verification date, and avoid mixing stale table values with live offer values.
Wrap-up
If you are refinancing, shopping, or modeling payments, treat the current moment as a transition window. Use the central bank decision for direction, then anchor on the bank’s product-specific quote for execution. When a rate table looks stale, label it stale and move on.
What to remember when the screenshots don’t match
- A lower policy rate shifts the baseline for variable-rate borrowing in Israel.
- Prime’s formula is stable, but published tables can lag behind pricing reality.
- Special-rate campaigns can display faster pass-through than slower-updating reference tables.
- For decisions that cost money, rely on the product-specific quote and your margin over prime, not generic pages.
