Iceland Rate Cut Mainly Caused by Mortgage Ruling, Governor Says

A surprise reduction in borrowing costs by Iceland’s central bank was largely prompted by a court ruling on mortgage loans that suddenly led to stricter lending terms, Governor Asgeir Jonsson said.

The ruling by the nation’s Supreme Court last month “has changed how the banks price their loans,” Jonsson said in an interview in Reykjavik on Wednesday, referring to the verdict that temporarily halted issuance of some home loans, disrupting the housing market.