Amendments to rules on borrower-based measures
In view of the extraordinary circumstances prevailing in Grindavík, the Financial Stability Committee of the Central Bank of Iceland (FSN) has approved amendments to the Bank’s rules on borrower-based measures. New Rules on Maximum Loan-to-Value Ratios for Mortgage Loans to Consumers, no. 217/2024, and new Rules on Maximum Debt Service-to-Income Ratios for Mortgage Loans to Consumers, no. 216/2024, have been published in the Law and Ministerial Gazette [Stjórnartíðindi] and will take effect tomorrow, 23 February 2024. At the same time, the previous Rules on Maximum Loan-to-Value Ratios for Mortgage Loans to Consumers, no. 550/2023, and the previous Rules on Maximum Debt Service-to-Income Ratios for Mortgage Loans to Consumers, no. 701/2022, shall cease to apply.
The new Rules grant individuals who owned residential real estate in Grindavík on 10 November 2023 increased flexibility in connection with their next home purchase. When these property owners buy their next home, the maximum loan-to-value ratio will be 85% instead of the previous 80%, and the maximum ratio of debt service to disposable income will be 40% instead of the previous 35%. The changes described above will expire on 1 March 2027.
Press release no. 4/2024
22 February 2024