The Variable Unlinked Track (MALATZ)

The variable unlinked loan, or MALATZ for short, is a loan where the interest rate resets every fixed period (1–5 years) according to market conditions. The principal is not linked to the Consumer Price Index (CPI).

Regulatory limits

Under Bank of Israel directives, this loan track (together with Prime and MATZ) may not exceed 66.66% of the mortgage portfolio. This limit exists because the rate changes frequently, which creates uncertainty in the monthly payments.

What affects the rate?

Looking at the interest-rate market, it turns out that the LTV (loan-to-value) is the dominant factor affecting the rate — not the loan term. Banks offer different rates based on the LTV ratio, while the differences across terms stay minimal.

For up-to-date interest-rate figures, see the interest-rate statistics.

Early prepayment fee

Yes, an early prepayment fee does apply. That said, banking regulations call for a reduced calculation — the fee is figured on the assumption that the entire principal is repaid on the next interest rate change date, which significantly lowers the fee amount.

Advantages

• More favorable portfolio spreads — makes room for lower rates on the other loan products in the mortgage mixture.
• A strategic tool — can be used to negotiate rates across the overall mortgage structure.

Disadvantages

• Changing conditions — the terms change regularly, with no say from the borrower.
• Unpredictable monthly payments — the payments shift at each interest rate change date.
• Slower principal reduction — the principal can shrink more slowly even as payments rise.

Common mistake

Many people believe an unlinked loan protects against inflation — but that's an illusion. The rate on MALATZ is set based on government bond yields, which already bake in inflation expectations. When the rate resets every few years, any change in expected inflation feeds straight into the new rate. Read more about the illusion of the unlinked loan.

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