That's an interesting point. There have been writers deeply rooted in English regional folklore and traditions -- Alan Garner, for one. But much of the Euro fantasy stems from the diaspora, which may be one reason why Irish mythology, in particular, has been so dominant. But then there's Tolkien and his 'Northern-ness' -- which is less directly Icelandic than it is Norwegian/Finnish/Danish, but some of which has been transmitted to us via Iceland. (The Rohirrim read more Anglo-Saxon to me than Norse, and they are the closest thing to saga-type people in his work, I find.) There's a huge research topic in there somewhere!