Government to reduce spending and reduce mortgage leverage Skip to content

Government to reduce spending and reduce mortgage leverage

As widely reported by the Icelandic media, the Icelandic government announced earlier this week that as of July 1st, it would bring down the cap on the Icelandic Housing Fund’s mortgage lending from 90 per cent of 80 per cent of appraised asset value and reduce the maximum loan from ISK 18 million to ISK 17 million.

The Icelandic government also announced that it would put major capital expenditures on hold pending discussions with local authorities to do the same.

According to a news release from the office of the Prime Minister, the purpose of these actions is to reduce inflationary pressure in the economy.

Icelandic National Broadcasting Service, RÚV, quotes Magnús Árni Skúlason, associate professor and director of the Housing Market Research Center at Bifröst School of Business saying that the proposed changes will “reduce demand” in the housing market.

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