The Central Bank conducts quarterly lending surveys among the four commercial banks. In the surveys, the Bank asks about respondents’ assessment of credit supply and demand; changes in their lending rules, lending rates, and interest premia; and the factors that have determined those changes in the past three months. Respondents are also asked about their expectations for the coming six months. The results of the most recent survey, conducted during the period 1-17 April 2026, are based on the average of the responses.
Highlights
According to the commercial banks’ responses, their supply of mortgage loans to households was unchanged in the past three months. On the other hand, they expect supply to increase marginally in the coming six months, as all of the banks began again in March to offer non-indexed variable-rate loans after having suspended them temporarily in the wake of the Supreme Court’s October 2025 judgment in the so-called interest rate case. The banks expect the supply of other loans to households to remain unchanged during the period. [1] Household demand for mortgages was unchanged in the past three months, according to the banks’ responses, but they expect it to contract slightly during the next six months. The banks reported a slight downturn in demand for motor vehicle loans in the previous three months and expect a continued marginal decline in the six months ahead.
According to the banks’ responses, rules on motor vehicle loans to households were eased slightly in the previous three months, owing to increased competition from other banks; however, the banks expect these rules to remain unchanged in the coming six months. The banks reported that their rules on mortgage lending to households had been unchanged in the past three months, but they expect to ease them slightly in the six months ahead. Furthermore, competition for household loans is expected to increase in the next six months, vis-à-vis other banks and other credit market entities.
Interest rates and interest premia on inflation-indexed loans to households were unchanged in the previous three months, according to the banks’ responses. The banks assume that interest rates and interest premia on indexed household loans will remain unchanged in the coming six months. Interest rates on non-indexed loans to households rose in the past three months, according to the survey, but interest premia were unchanged over the same period. The rise in the Central Bank’s key interest rate was the main driver of interest rate hikes, although higher funding costs also contributed slightly to the increase. The banks expect interest rates on non-indexed mortgages to continue rising in the six months ahead, in line with expectations of a higher key interest rate and increased funding costs.
The banks reported that the supply of corporate credit had been unchanged in the previous three months, and they expect it to remain broadly unchanged in the next six months. According to the banks’ responses, businesses’ demand for credit financing in Icelandic krónur subsided in the past three months. Furthermore, the banks expect demand for króna-denominated loans to contract slightly in the coming six months, and they also expect a marginal contraction in small businesses’ demand for foreign-denominated loans.
The survey indicates that the banks’ rules on corporate lending were unchanged over the past three months, and no changes are expected in the next six months. The banks also expect competition for loans to small businesses to remain unchanged in the next six months, but they expect competition for loans to larger companies to increase marginally vis-à-vis both other banks and market financing.
According to the banks’ responses, interest premia rose slightly on inflation-indexed loans to both small and large companies in the past three months. The banks cited regulatory provisions as the main driver of the increase in premia, although interest rates were unchanged. Interest rates on non-indexed corporate loans rose over the past three months, primarily because of the increase in the Central Bank’s key rate, but also because of higher bank funding costs and amendments to the regulatory framework. Interest premia were unchanged. Interest rates and interest premia on foreign-denominated loans to both small and large companies were unchanged over the same period.
The banks do not expect changes in interest rates and interest premia on inflation-indexed loans to companies in the coming six months, but they expect interest rates on non-indexed corporate loans to rise in tandem with expectations of a higher key interest rate and increased funding costs. They assume that interest premia will remain unchanged. They also expect interest rates and interest premia on foreign-denominated loans to large companies to rise slightly over the same period because of higher funding costs.
[1] In the survey, loans to households are divided into three categories: residential mortgages, motor vehicle loans, and other loans. Loans to businesses are classified as either long-term or short-term loans. Furthermore, survey participants are asked about foreign-denominated lending to both households and businesses.