The Financial Stability Committee (FSN) of the Central Bank of Iceland approved targeted changes to borrower-based mortgage measures after identifying higher-risk “joint purchase” arrangements in the housing market, while leaving key macroprudential capital buffers unchanged. The FSN also adopted new rules to strengthen oversight of systemically important financial market infrastructure, including the creation of a financial infrastructure incident centre. The amended Rules on Maximum Debt Service-to-Income Ratios for Mortgage Loans to Consumers require debt service calculations to include all payments made by individuals for the acquisition of housing, including payments for the use of the property linked to the acquisition even if those payments are deferred. The FSN highlighted recent announcements by funds planning to invest in residential property alongside homebuyers, with public declarations indicating that around one-third of new homes in greater Reykjavík would be offered under such joint purchase arrangements, which the Committee viewed as potentially undermining the objectives of borrower-based measures; it also noted that lenders’ exemption authorisation under the Rules was expanded in October 2025 from 5% to 10% of issued mortgage loans. Separately, the annual review of systemically important financial institutions confirmed Arion Bank, Íslandsbanki and Landsbankinn as systemically important and kept the other systemically important institution (O-SII) buffer unchanged at 3%, while the countercyclical buffer (CCyB) was held at 2.5%. The new infrastructure framework sets criteria for designating systemically important infrastructure components whose disruption could affect financial stability and establishes how the Central Bank will oversee them, alongside rules for an incident centre intended to support information sharing and coordinated responses to cyber and operational incidents.
Central Bank of Iceland 2025-12-03
Central Bank of Iceland amends mortgage debt service-to-income rules, keeps CCyB at 2.5% and O-SII buffer at 3%, and adopts new oversight rules for systemically important financial infrastructure
The Financial Stability Committee of the Central Bank of Iceland approved changes to borrower-based mortgage measures due to higher-risk "joint purchase" arrangements, while maintaining macroprudential capital buffers. New rules were adopted to enhance oversight of systemically important financial market infrastructure, including establishing a financial infrastructure incident centre.