Foreign Currency Loans Rising in Popularity Skip to content

Foreign Currency Loans Rising in Popularity

Indexed mortgages at the banks reduced by ISK 3.3 billion (USD 44 million, EUR 28 million) in February, partly because people choose to take loans in foreign currencies to pay their indexed mortgages in ISK. Such loans increased by ISK 4 billion (USD 53 million, EUR 34 million) last month.

The capital of loans in foreign currency which people took in February grew considerably in March because of the depreciation of the ISK and the debt burden rose accordingly, Morgunbladid reports.

The ISK did, however, appreciate by 0.66 percent yesterday.

According to data from the Central Bank of Iceland, the commercial banks granted very few new loans for purchasing property in February. The interest rate for indexed loans in ISK is currently over seven percent.

Chairman of the Association of Real Estate Agents in Iceland Ingibjörg Thórdardóttir said the main reason for the current stagnation in the local real estate market is the difficulty for people to obtain loans.

Click here to read more about the ISK and here to read more about the real estate market in Iceland.

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