Bank of Israel rate: 3.25 percent, with the next decision on 21 October
The headline says "interest rates have fallen." Yet your monthly mortgage payment looks exactly the same. How is that possible? The answer is hidden in the repayment schedule, which almost nobody opens on the day of a rate decision.
The Bank of Israel interest rate stands at 3.25 percent, as shown on the bank's announcements page. On 1 September 2026, the Monetary Committee decided to lower it by 0.25 percentage points to that level. The next decision is scheduled for 21 October 2026. Inflation over the past 12 months stands at 1.5 percent. Three numbers, none of which alone tells you how much you will pay next month.
Why a quarter‑point cut does not reach every mortgage
A mortgage is not one loan. It is a mix of components, each with its own rules. A prime‑linked component is tied to the Bank of Israel rate, with a margin fixed in the contract. A fixed‑rate component does not move on decision day and will not move next time either. An index‑linked component moves with the index, not with the committee's announcement.
Who feels the cut? Only the part of the debt linked to prime. There, the reduction of 1 September should appear in the next period's interest rate, under the component's terms. It does not erase the margin. If your contract is prime plus a margin, that margin stays in place; only the base fell by a quarter point.
Savers: what happens to money in the bank
What about the other side, the money sitting in the bank? Someone opening a short‑term shekel deposit now may find the bank offering a lower rate on new money. But a deposit already agreed for a fixed period is not reopened because of an announcement. It continues under the signed terms.
One detail surprises many people: money in a current account does not receive the Bank of Israel rate at all. It receives whatever the bank specifies in the account's rate schedule, which is sometimes zero. The Bank of Israel page also shows deposit and lending facilities for banks. That is the price of money between the central bank and commercial banks, not the interest rate on your apartment.
The refinancing offer arriving right now
Between 1 September and 21 October, the known rate is 3.25 percent. Refinancing offers may arrive in precisely this window. Should you be excited? Before signing, ask one important question: what is the saving based on?
An offer promising savings "after the next decision" rests on the provider's assumption, not a committee decision. The announcement of 1 September contains no commitment to another cut in October. A meeting date is a date, not a direction. Ask to see the saving against the current repayment schedule, separately from any future scenario. Remember that 12‑month inflation of 1.5 percent is a backward‑looking figure, not a forecast.
There is another calculation to make: the balance, the loan components and any early repayment fee. A quarter‑point saving on a small part of the debt may be less than the loan arrangement fee. Do the calculation using the schedule, not the headline.
Your actual shekels
If you have a prime‑linked consumer loan, check the adjustment date in its terms. Some components adjust at the beginning of the month, others on the payment date. The size of the balance changes everything: a quarter point on a small balance means a few shekels. A quarter point on a large balance already warrants a conversation with the bank.
Businesses with prime‑based credit see the same mechanism. Interest on the facility changes if it is linked to prime. A standing payment to a supplier, by contrast, does not change because of the committee.
And on 21 October? The source is that day's interest rate announcement on the Bank of Israel website, not a screenshot circulating on WhatsApp from yesterday. Until then, the number is 3.25 percent. Your mortgage moves only in the part tied to it.
