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RealFix Finance
Operation Rescue | Urgent Regulatory Update18 min readUpdated: August 2026
Israel's Mortgage Reform Was Postponed From July to October 2026
- and almost no one updated it
The Bank of Israel was supposed to change how repayment capacity is calculated for loans secured by property as early as July 1, 2026. In practice, the date was postponed to October 1, 2026. Anyone with an existing mortgage planning an additional loan, debt consolidation, or a cash-out refinance just got a surprise extension. The question is whether they'll know how to use it.
In short: From October 1, 2026, a bank reviewing an application for an additional housing loan secured by a property that already carries a mortgage must calculate the payment-to-income ratio on all loans secured by that property together - including loans from non-bank entities. A file that clears easily today may look completely different after October.
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10/1/26
Effective date
50%
Absolute PTI cap
40%
100% risk-weight threshold
70%
Permanent LTV, any-purpose loan
Summary: what's actually happening here
In February 2026, the Bank of Israel published an amendment to Directive 329, originally set to take effect on July 1, 2026. The Supervisor of Banks decided to postpone the effective date by three additional months, to October 1, 2026. This isn't a new reform that appeared out of nowhere - it's a reform that all the financial media already covered over the summer, which simply received a technical postponement that most of the public never noticed.
Stricter calculation
All loans on the property examined together
Applies to non-bank too
No more splitting loans between lenders
70% LTV made permanent
A relief that becomes a fixture
Key findings
1. If you already have a mortgage and want to take an additional loan secured by the property (any-purpose, renovation, debt consolidation) - from October 1, the bank examines the total payments on the property together, not each loan separately.
2. Above a 40% payment ratio, the loan becomes more "expensive" for the bank (100% risk weight), which usually translates into a higher interest rate for the customer or a rejection.
3. The rule applies regardless of the lender's identity - loans from non-bank entities secured by the same property also enter the calculation. "Workaround" planning just got much harder.
4. At the same time, an any-purpose loan secured by property up to 70% financing - previously a temporary order - has become a permanent arrangement. There are more tools available, but you need to know how to combine them correctly.
The postponement story: from July to October
To understand where things stand, it's important to understand the exact timeline - because that's exactly where the market confusion came from.
February 8, 2026
Circular 2840 is published
The Bank of Israel publishes an amendment to Directive 329 on "Restrictions on Granting Housing Loans," clarifying how the payment-to-income (PTI) ratio is calculated when taking an additional housing loan secured by the same property.
July 1, 2026 (original)
The original effective date
This is the date most articles, guides, and calculators online - including some of our own content - still show as the relevant date. As of the circular's publication, that was correct.
July-August 2026
Requests for postponement from market participants
Following requests submitted to the Supervisor of Banks, it's decided to extend the banks' preparation period for implementing the amendment.
October 1, 2026
The updated, binding date
The Bank of Israel officially announces the postponement of the effective date to this date. This is the date that actually matters now - not July.
Why this matters more than it sounds
Any content written about the reform between February and July - including calculations, guides, and even advice you received verbally - may be referring to the wrong date. Anyone who planned to "act before July" and didn't manage to hasn't lost the opportunity. There's still a window. But anyone relying on outdated information may also miss other changes that were updated in the same circular.
What exactly changes in the calculation
Let's strip away the legal wording and translate it into plain language for homeowners. Three main mechanisms are changing:
1. Combined calculation on all housing loans against the same property
When taking an additional housing loan (for example an any-purpose loan) secured by a property that already carries a housing loan, the bank must calculate the total monthly payments on both loans together against disposable income - rather than reviewing each loan separately.
Applies to: housing loans with a repayment period of more than 18 months. Shorter loans are excluded.
2. The calculation applies regardless of the lender's identity
This is the point the public understands least: even if the second loan was taken from a non-bank entity (an insurance company, a fund, a P2P platform) rather than the bank itself, it still enters the calculation the bank performs when reviewing a new application. You can no longer "split" loans between different lenders to dodge the cap.
3. Clear caps: 40% and 50%
50%
Absolute cap
A banking corporation will not approve or provide a housing loan with a payment-to-income ratio exceeding this figure.
40%
100% risk-weight threshold
Above this threshold, the bank must allocate higher regulatory capital against the loan - raising its cost.
📊 Comparison: before vs. after October 1, 2026
| Aspect | Until today | From 10/1/2026 |
|---|---|---|
| Reviewing an additional loan secured by property | Sometimes separately from the existing loan | Together with all housing loans on the property |
| Non-bank loans on the same property | Not always included in the bank's review | Explicitly included in the calculation |
| Any-purpose loan secured by property | Up to 70% (temporary order) | Up to 70% (permanent) |
| Property value cap for reduced-LTV calculation | Lower | Updated upward (~₪2.1M) |
What improves at the same time - not just tightening
The Bank of Israel is playing both sides - tightening the repayment-capacity review on one hand, while retaining and even permanently securing tools that provide access to financing for those who know how to use them correctly.
Any-purpose loan up to 70% financing - now permanent
The option to take an any-purpose loan secured by a property up to 70% of its value (instead of the standard 50%), which started as a temporary order, is now regulated as a permanent arrangement. It remains a central tool for debt consolidation and leveraging an existing property - but you need to know how to structure it so it also clears the stricter PTI calculation.
Recognition of half a first-degree relative's income
Under certain conditions, half of the disposable income of a first-degree relative (spouse, parent, sibling, child) who joins as a guarantor or co-borrower can be recognized - which can significantly improve the calculated payment ratio and open the door to files that would otherwise fail.
Loans shorter than 18 months - outside the calculation
Loans with a repayment period of less than 18 months are not included in the combined payment-ratio calculation. This is a technical parameter, but a highly relevant one for correctly structuring loans meant for temporary needs.
Who is affected? Check yourself
The reform doesn't touch everyone with the same intensity. Here are four main groups - find yours and click for a focused check.
Mortgage holders wanting an additional loan
You have an active mortgage and are considering an any-purpose loan, a renovation loan, or debt consolidation secured by the same property - this is the group most directly affected.
Investors with several pledged properties
If you have more than one housing loan on the same property, or plan to leverage an existing property for another investment - check your combined exposure in advance.
Business owners with credit secured by their home
Have you taken or are you considering business credit secured by a lien on your private apartment? The combined calculation may change the picture - worth checking before you proceed.
Not sure if this applies to you?
Every financial situation is different. If you're not sure where you stand relative to the reform - it's better to check with an expert than to find out at the bank on the day you've already signed something.
Numeric example: what cleared yesterday may not clear tomorrow
Say a family has combined disposable income of ₪12,000 per month, an existing mortgage with a ₪3,500 monthly payment, and wants to take an additional loan for debt consolidation with an expected payment of ₪2,000 per month, secured by the same property.
Before October 1 - separate review
Disposable income₪12,000
Minus: existing mortgage payment₪3,500
Remainder tested against new loan₪8,500
Payment ratio on the new loan2,000/8,500 = 23.5%
Below threshold - looks easily approvable
From October 1 - combined review
Disposable income₪12,000
Existing mortgage + new loan payment3,500 + 2,000 = ₪5,500
Tested againstTotal income
Combined payment ratio5,500/12,000 = 45.8%
Above 40% - 100% risk weight, dangerously close to the 50% cap
Same family, same income, same request. A file that looked easy under the old calculation looks borderline and risky to the bank under the new one. That's precisely the difference between a file approved within a week and one that requires professional structuring - or a completely different lender.
3 mistakes that will cost you
1. Relying on an old approval in principle
If you received an approval in principle for an additional loan but draw the funds after October 1, 2026, the bank may re-examine your file under the new rules - even if nothing changed on your end. "I have an approval" doesn't equal "I have money in the bank."
2. Ignoring existing non-bank loans on the property
Thought "the bank doesn't know" about the second loan you took from a non-bank entity? From October 1, the bank is required to explicitly include it in the calculation. Hiding it or failing to disclose it won't just fail to help - it could expose you to a more serious problem down the line.
3. Waiting for "another postponement"
One postponement doesn't guarantee a second one. Anyone betting on another delay and skipping proper planning in the meantime may find themselves on October 2 with a file that would have sailed through in September, now requiring a completely different structure.
How RealFix operates on this
We've been with our clients since 1999. We've seen regulations change, temporary orders become permanent, and clients who lost money by waiting one day too long - and others who profited because they knew exactly when and how to act.
Did the bank say your file is "borderline"? We have tools the loan officer doesn't know about.
We don't wait for regulation to "settle." We analyze your file against the exact rules - including the October 1 scenario - and build a structure that clears them before you approach the bank.
✓Early calculation of your combined payment ratio under the new rules - before the bank does it
✓Checking whether a first-degree relative's income can be included to increase recognized income, when relevant
✓Structuring a mix of bank and non-bank financing that minimizes the risk weight and improves approval odds
✓Parallel submission to 3-5 lenders, so you're not dependent on a single bank's opinion
You have a window to act until October 1, 2026
Not to "rush and close" recklessly - but to check in time how your file will look under both scenarios, and choose the right path from knowledge, not pressure.
Questions & answers about the reform
Everything people have asked us most since the date was updated
FAQ
Frequently Asked Questions About the Mortgage Reform
October 2026 update
It's an amendment to Bank of Israel Proper Banking Conduct Directive 329 (published under Circular 2840 on February 8, 2026) that clarifies how the payment-to-income ratio (PTI) is calculated when taking an additional housing loan secured by a property that already carries an existing housing loan. From this date, the total monthly payments on all housing loans secured by the same property - existing and new, regardless of the lender - are examined together against disposable income, rather than each loan separately.
Don't wait for the bank to tell you the answer
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The information in this article is based on official Bank of Israel publications as of its writing date (Circulars 2840 and 2852, amendments to Proper Banking Conduct Directive 329). We recommend verifying the most up-to-date rules with your bank or a licensed advisor at the time you actually act.
Legal Disclaimer
The information and simulations presented on this website are for illustrative purposes only and do not constitute a binding offer for credit or financial advice. Credit Approval: Subject to final underwriting, clean credit data (positive credit score), clean banking history, and meeting the threshold requirements of the financing institutions. Interest Rates: The interest rates displayed are estimates only, based on average market data, and may change at any time according to the client's individual risk profile and economic conditions (Bank of Israel interest rate changes / CPI). No Commitment: RealFix does not guarantee loan approval or the terms displayed in the calculator. E&OE.