What Is the CPI-Linked (Tzmooda LaMadad) Track in an Israeli Mortgage?

The CPI-linked track (צמוד מדד — Tzmooda LaMadad) works differently from anything in most Western markets. The interest rate is fixed and typically lower than the Katz rate, but the outstanding principal itself is adjusted monthly for Israeli inflation (the Consumer Price Index, or Madad).

In practice, this means your loan balance can grow even as you make payments, if inflation outpaces your amortization. The lower headline rate compensates the bank for handing that inflation risk to you, the borrower, rather than absorbing it as it does on the Katz track.

Why it matters for a buyer: a CPI-linked track is the hardest for overseas buyers to model, because a rise in Israeli inflation increases your NIS-denominated balance regardless of what's happening to your foreign-currency income. Understand your total CPI exposure across all tracks before signing.

Source: Bank of Israel mortgage track regulations; Central Bureau of Statistics CPI data