The Bank of Israel lowered the interest rate today (Tuesday) - this is the third time in a row - by 0.25%, and it will now stand at 3.25%. .
As a result, the prime interest rate, from which most loans and mortgages in the economy are derived, drops to a level of 4.75%.
The bank's monetary committee decided to lower the interest rate after inflation moderated in recent months, currently standing at 1.51% - the middle of the target range set by the Bank of Israel.
According to data from the Mortgage Advisors Association, the new interest rate reduction reduces the average monthly repayment on a 450,000 shekel mortgage on a prime track for a 25-year period by 65 shekels. The total cost over the life of the loan decreases by about 20,000 shekels.
In a broader perspective, since the Bank of Israel began lowering the interest rate in November 2025, the monthly repayment on the same mortgage has decreased by a total of approximately 334 shekels.
On the other hand, savers in deposits and solid avenues are expected to see a decrease in the return they receive on their money.
Chairman of the Business Sector Presidency, Dubi Amitai, welcomed the Bank of Israel's decision. "The decision of the Governor of the Bank of Israel and the Monetary Committee to reduce the interest rate is a responsible and proportionate step that conveys confidence in the Israeli economy." He added that the step "also constitutes an important expression of confidence in business and in the ability of the Israeli economy to continue to grow.".
The Mortgage Advisors Association welcomed the interest rate reduction and said that it was a boost to the housing market, but clarified: "It is important to understand that we are not yet returning to the world of interest rates that we knew in the past.".
Last month, the bank lowered the interest rate by 0.251% to 3.51%. The bank's monetary committee decided to lower the interest rate after inflation stabilized at the center of the bank's target range, standing at 1.91%.
The bank was content with lowering the interest rate by 0.251% despite pressure from economic factors, led by exporters, to lower the interest rate more sharply.
Last May, the Bank of Israel decided to lower the interest rate by 0.25% to 3.75%. This was due to the decline in inflation and the strengthening of the shekel.
