In the loan calculator, users can compare different types of interest rate structures. Information on the characteristics of fixed and variable interest rates, and their implications for consumers, can be found in informational videos. Decisions regarding changes to the Bank’s variable interest rates are based, among other factors, on changes to the interest rates set by the Central Bank of Iceland and published on its website, www.sedlabanki.is; the yield requirements of bonds issued by, among others, banks and financial institutions in Iceland, the Treasury of Iceland, or municipalities; changes in funding costs; operating costs; market interest rate conditions for comparable loans; and the Bank’s margin for credit risk. When the Bank determines that these factors warrant an interest rate adjustment, the change is communicated electronically to the borrower through Arion Bank’s online banking platform. Interest rate changes are generally notified to the borrower with 30 days’ notice. The Bank reserves the right to change interest rates with shorter notice to the extent that such changes are caused by factors beyond the Bank’s control.
For certain consumer loans, such as Arion Bank hf. residential mortgages, the terms may specify that during the validity period of the mortgage deed the Bank is permitted to increase the loan’s interest rate by up to 0.5 percentage points if none of the borrowers has registered domicile at the property securing the loan. The Bank is also permitted to increase the loan’s interest rate by up to 1 percentage point if all usage units of the mortgaged property are not registered as completed in the Real Estate Registry (Fasteignaskrá) within 12 months of the issue date of the mortgage deed. The borrower’s obligation to pay such interest surcharges on the basis of domicile or property completion lapses once the borrower has submitted documentation confirming that they have registered their domicile at the mortgaged property, or that the property is registered as completed in the Real Estate Registry, as applicable.
More detailed information on the conditions for interest rate changes is available in the standardised information for consumer loans, as well as in the loan agreements themselves.