The Financial Stability Committee (FSN) of the Central Bank of Iceland decided at an extraordinary meeting held today, 31 October 2025, to amend the Rules on Maximum Debt Service-to-Income Ratios for Mortgage Loans to Consumers, no. 216/2024, and the Rules on Maximum Loan-to-Value Ratios for Mortgage Loans to Consumers, no. 217/2024.
Uncertainty has developed in the mortgage lending market following the Supreme Court’s 14 October 2025 decision in Case no. 55/2024, and lenders’ responses to that decision. In view of this and to support mortgage lending market functioning, the FSN has decided to amend its borrower-based measures. More specifically, the Committee has decided to increase the exemption allowing lenders to issue loans in excess of the maximum debt service-to-income (DSTI) ratio from 5% to 10% of the total amount of consumer mortgages issued in the previous quarter. In addition, the Committee has decided to increase the maximum loan-to-value (LTV) ratio on mortgages for first-time purchases from 85% to 90%.
The aforementioned Rules will be amended accordingly and reissued under their current titles. The new Rules will be published in the Law and Ministerial Gazette [Stjórnartíðindi] website on Monday 3 November 2025 and will take effect one day later.