A mortgage stress test for your own budget: what if rates move

Ten at night. The kids are asleep, and the phone lights up with a headline about the rate decision. You read it twice, try to work out in your head what it means for the payment, lose track of which track is which, and put the phone down with no conclusion. Just a knot in the stomach.

What stays behind is the feeling that it comes down to luck. If rates are kind, the month holds. If not, it doesn't. From there, two familiar paths: follow every forecast, or don't look at all until the bank statement shows the change.

Part of you wants security, to know the household holds; part of you would rather not see the bad scenario written down: "If we calculate it, it's like we're inviting it." Both come from a real place. Wanting peace is a real need; the peace of not knowing just ends with every headline. This article offers a kind that doesn't.

Why watching rate forecasts doesn't calm anyone

If the forecasts never settled your stomach, that isn't your failing. A rate forecast changes no line in your budget. Right or wrong, next week it will be replaced by another, and no household can know where rates will go. What is in your hands is the response: what you do whichever way they move.

When the mortgage was approved, the bank tested your repayment against the income and spending of then. Since then, children may have been born, salaries have changed, a fixed cost has come or gone. Nobody checks today's budget against a different rate for you.

According to the Bank of Israel, its policy rate is 3.25% and the prime rate 4.75% (September 2026); check the current figure on the Bank of Israel site. A household stress test doesn't guess what happens to that figure. It asks one question: if the rate on the variable tracks were one or two percentage points higher, what would the payment be, and what would be left of the month? Rates can move in both directions. The test only examines the direction that would weigh on you, because the other one needs no plan.

A household stress test: two scenarios on one page

One rate scenario and one index scenario, written on a page, with the name of the category the difference would come from. No guessing the next rate, no change to the mortgage itself. Half an hour every six months.

An interest rate scenario on your own mortgage, from statement to category

The example is an invented family in round numbers; every rate in it is an illustrative assumption, not a forecast.

Step 1: sort the tracks

Using the bank's annual statement, put each track in one of three groups: variable (prime, and tracks whose rate resets on a date), CPI-linked, and fixed and unlinked. The third stays out: its payment is known. A track that is both, such as a CPI-linked track that resets every five years, belongs in both of the first two groups and goes through both scenarios. How each track type reacts: mortgage tracks explained.

In AlphaHome: the properties and mortgages page shows each track with its type, rate and balance, and the monthly payment split into interest and principal. The app doesn't run rate or index scenarios, so the calculation happens here, in the block and table below or on a page.

Step 2: one and two points higher on the variable tracks

Say the family's variable tracks have 400,000 ILS left over 22 years at 4.75%. The payment: about 2,445 ILS. One point higher: about 2,674 ILS, an extra 229 ILS a month. Two points higher: about 2,912 ILS, an extra 467 ILS. In practice each track has its own spread, reset date and terms, set out in your loan contract, so treat this as an approximation, not the figure the bank will calculate.

To work it out without the block: at 4.75%, every 100,000 ILS of balance adds roughly this much to the payment (an illustrative assumption, not a forecast):

Multiply the extra by the number of hundred-thousands left. 400,000 ILS over 20 years, for instance, is 4 × 56 = 224 ILS a month at one point higher, close to the family's 229 ILS over 22 years. Between two rows, take the one with more years: its extra is higher, the right side to err on.

Your variable tracks, one point higher

Loan amount₪400,000

Years to repay22 years

Monthly payment

₪2,445

₪245,478 in interest over the whole loan

At 5.75% the payment would be ₪2,674

The rate here is an assumption for the example, not a forecast.

In the block, set the amount and years to your own variable tracks; the two-point scenario is in the table's last column.

Step 3: one index scenario for the linked tracks

In a CPI-linked track, both the balance and the payment follow the consumer price index published by the Central Bureau of Statistics. Take a linked track of 300,000 ILS paying about 1,631 ILS. If the index rose, as an illustrative assumption, 3% in a year, the payment would be about 1,680 ILS (49 ILS more) and the balance about 309,000 ILS.

Step 4: put the difference next to what the month leaves

Now add it up. In the first scenario the payment is 278 ILS a month higher; in the second, 516 ILS. Write both next to what an ordinary month leaves. Does the month still balance? By how much?

Step 5: decide in advance where it comes from

Pick one or two variable categories the difference would come from, such as eating out or subscriptions, and write their names next to the number. If you also want a cushion, give it a savings goal with its own name.

In AlphaHome: a savings goal called "Mortgage cushion" with an amount and a target date; the savings-goals widget on the dashboard shows what it still needs each month. The dashboard's "Free to spend until the end of the month" is what you compare each scenario against.

Mortgage cushion: six months of the second scenario

Monthly deposit₪300

Time to the target

11 months

If a mortgage rate rise leaves the month in the red

You did the sums, and the second scenario leaves the month in the red. This is information, not a verdict; it's why the test is done on a calm day. Today, pick one step: a small cushion, one permanent cut, or a conversation with a mortgage adviser or the bank about the mortgage itself. Families in this position usually describe a combination of small steps; the decision is yours. Then come back to the test in six months.

Another headline at night, and the stomach tightens again. Instead of rereading it, open the page. The number is already written there, and so is the category. Real movement at reset dates is a single budget line, as in the monthly mortgage payment.

Someone at home doesn't want to sit down for this. Ask for half an hour and one number: the payment at one point more. Written down, that number is often much smaller than the one imagined.

The next headline

If you wait for the next headline, you'll live it the way you lived the last one: a phone at night, sums in your head, no conclusion. That isn't weakness; it's a decision postponed to the worst moment to make it, at midnight with half the information.

A stress test moves the decision to a calm day: one page, two numbers, the name of a category, and a cushion with its own name if you want one. Rates will be no more predictable after that half hour. Your response will be. And when the next headline arrives, it will be one more piece of news, not one more night.

This week, take the balance on your variable tracks, work out the payment one point higher, in the block above or with the table, and write the monthly difference next to the name of the category it would come from.