in monthly debt service on non - indexed, variable - rate loans. furthermore, fixed - rate clauses on many borrowers'loan agreements will expire this coming winter. a decisive response is needed, but first we must diagnose the problem. to start with, it is clear that there are few casualties in the real estate market - as yet. those who have financed home purchases with nominal - rate loans in the past three years have profited on higher property prices and negative real rates. at the same time, wages have risen significantly overall. so it is unsurprising that statistics iceland's standard of living study revealed that households with onerous housing costs have declined substantially in number. about 10 % of homeowners and 14 % of renters consider their housing costs burdensome. this shows that debt service has risen less than could be inferred from public discourse. just over half of households who have taken loans in the past three years have seen their debt service rise by less than 30, 000 kr. per month. after adjusting for wage growth, the ratio of debt service to disposable income is broadly unchanged. as of this past january, the share of households whose debt service exceeds 35 % of disposable income had risen by only 2 percentage points, from 7 % to 9 %. the winds are now changing in the real estate market, and the central bank is determined to push real rates upwards, whether through policy rate hikes or by lowering inflation and inflation expectations. this is why, in its most recent statement, the financial stability committee encouraged mortgage lenders to " work with borrowers, as they have in the past, to prevent financial distress insofar as is possible. " i expect that we will be taken seriously and that the banks will be prepared to respond when fixedrate clauses expire this coming winter. on the other hand, there is no reason for taxpayers to subsidise borrowers'mortgage interest expense - not at this point in time, at least. after all, it is beyond doubt that those who took out mortgages at nominal rates have benefited greatly from negative real rates. there is no reason for such subsidy to continue with contributions from the treasury. we are looking ahead to a time when we must wage a full - blooded assault on inflation. hopefully this period will be short - lived, but while it is ongoing, lenders must work effectively with their customers so as to keep their debt service burden within

- footed on tussocky ground than on paved streets. a good doctor once told me that the reason people end up going in circles in a blizzard or a blind fog was that our feet differ in length and therefore walk at differing speeds. but then, it is possible to find scientific explanations for virtually any problem without being much closer to solving it. monetary policy can never be a private affair belonging only to economists or experts. i would like to close today by quoting the late johannes nordal, former central bank governor and the nation's most influential official of the twentieth century, who died a scant month ago at age 99 – bless his memory. in an article published in fjarmalatiðindi back in 1990, when enhanced independence for the central bank was in the offing, he said this : " conferring significant monetary independence on a central bank is hardly a realistic option unless the economic objectives the bank must pursue are laid down clearly in the law and enjoy broad support in the community. " the fact is that central banks can never operate in a societal vacuum. twelve times i have had to face the nation and announce an increase in interest rates, and i have to admit that it has sometimes been a strain to be the bearer of bad tidings. there has been vigorous exchange of opinion about these decisions. 7 / 8 bis - central bankers'speeches the central bank has received its share of criticism, some of it truly scathing. but even so, i have found icelanders very understanding, and i have felt that we here in the bank have been able to explain our actions and the importance of standing guard of economic and financial stability. yes – even though the central bank's actions have been painful for many, i still have the feeling that the nation understands and supports the job entrusted to us – and maintains its sense of direction even in the din of foghorn blasts in the press. yes – i think that in spite of everything, it is the clear will of the people to exorcise inflation. we have shown that when we stand together, all paths are navigable – we can move straight ahead, not in circles, as we did in the 1970s. i would like to end where i began – as any proper circle must – with another quote from matthias johannessen's reykjavik letter of 19 august 1979. he concludes as follows : " we icelanders realise full well that independence is nothing but an empty word unless we stand on our own feet economically