Íbúðalánasjóður - Company Announcement

The Housing Financing Fund - Interest Rate Decision

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
11 May, in addition to the weighted financing cost of the prepayments of HFF
bonds.  The weighted interest rate for the auction and prepaid HFF bonds is
4.24%. 

The interest rate premium for operations is 0.25%, 0.20% 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 make the following change on the Fund's lending rates:  The
interest rates on housing loans with a prepayment clause will be 4.70%, while
the rate will be 5.20% for loans without such a clause.  The new interest rate
decision takes effect today, 12th May, 2009.