Israeli Mortgage Volume Surges to 10.9 Billion Shekels Amid Rate Cuts
Mortgage volumes in Israel reached 10.9 billion shekels in August driven by a surge in refinancing amid falling interest rates. First International Bank offers the lowest average rates.
The volume of mortgages in August reached approximately 10.9 billion shekels. Mortgages are beginning to surge during this period largely due to the high volume of refinancing. Borrowers are refinancing their mortgages because interest rates have dropped, which directly impacts the volume of loans. A refinanced mortgage is essentially a new mortgage.
In June, the threshold surpassed 11 billion shekels—a figure not seen since December 2025 and December 2024. Mortgage banks are working at a high pace, issuing new mortgages and capitalizing on the wave of refinancing triggered by recent interest rate cuts.
Interest Rates and Market Trends
The interest rate currently stands at 3.25%, following three consecutive reductions. The Bank of Israel forecasts further cuts down to 3% to 2.75% within a few months. This means that monthly repayments for borrowers will decrease by hundreds of shekels, encouraging more people to purchase apartments.
When borrowers pay off expensive mortgages taken out in mid-2023 and take new ones at lower rates, the gap can reach up to 1%. Banks are also easing margins on the prime interest rate during this period. Most refinancing is done on a prime basis because there are no early repayment penalties in this portion of the mortgage.
The mortgage is the largest financial transaction in the life of most homebuyers. The big question is where to get a mortgage, what the interest rate will be, and whether the tracks suit our needs.
Bank Comparisons and Prime Rates
To help consumers navigate this, the Bank of Israel releases monthly data regarding average bank interest rates. Prime interest consists of the Bank of Israel rate plus 1.5%. With the current rate at 3.25%, the prime rate stands at 4.75%. Assuming a prime minus 0.7% rate, the average for this track should be 4.05%, but the actual average is currently 5.07%. Four banks offer cheaper rates.
In March, Bank Discount offered the best rates. By June, First International Bank led the market by a wide margin. Today, First International Bank remains the cheapest option with an average of 4.84%, offering favorable rates across both fixed and variable tracks.