Housing Financing Fund: Mortgage Ratio Reduced Skip to content

Housing Financing Fund: Mortgage Ratio Reduced

Jóhanna Sigurdardóttir, Minister of Social Affairs, announced yesterday that the state-run Housing Financing Fund (HFF) would lower its mortgage ration by offering mortgages for up to only 80% of the sale price or construction cost of housing from now on.

“The aim of this decision is to counteract the increases in housing prices, which has, in turn, led to growing inflation and higher interest rates,” Sigurdardóttir said in an interview with Fréttabladid. She urged Icelandic banks to follow suit and reduce their mortgage ratios.

Along with these measures, the minister has formed a committee that will initiate new policies to help people who haven’t been able to purchase their own housing, as well as those who have struggled in Iceland’s rental market.

In an interview with RÚV national radio this morning, Jón Bjarki Bendtsson, economist at Glitnir Bank, said the government has sent a clear message to the market. Furthermore, the decision should enable the Central Bank of Iceland to decrease its policy rates before the end of 2007.

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