Íbúðalánasjóður - Company Announcement

The Housing Financing Fund - Interest Rate Decision

According to paragraph 3, Article 21 of the Housing Act No. 44/1998, including
later amendments and Article 14 of the Regulation No. 522/2004, on HFF
mortgages and bonds, the Board of the Housing Financing Fund (HFF) can decide
the interest rate on HFF bonds based on financing cost from regular auctions of
HFF bonds on the one hand and on the weighted average financing cost of prepaid
loans on the other, in addition to an interest premium. 

HFF's interest rate decision is based on yield at the HFF bond auction held on
March 10th addition to the weighted financing cost of the prepayments of HFF
bonds. The weighted interest rate for the auction and prepaid HFF bonds is
3,48%. 

The interest rate premium for operations is 0.45%, 0.45% for lending risk and
0.50% for prepayment risk. 

Therefore the Housing Financing Fund, as a result of an auction of HFF bonds,
has decided to lower  the Fund's lending rates: The interest rates on housing
loans with a prepayment clause will be 4.40%, while the rate will be 4.90% for
loans without such a clause. The new interest rate decision takes effect today,
11th March, 2011.