No Solution at Household Debt Meeting Skip to content

No Solution at Household Debt Meeting

The main parties of interest in the household debt debate met for two hours at the Culture House in Reykjavík yesterday to discuss the calculations of the government’s task force on household debts. The talks led to no conclusion.

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The Culture House. Photo by Eygló Svala Arnarsdóttir.

The representatives of the Interest Association of Households and opposition parties, the Progressive Party and the Movement, maintain their view that a flat downsizing of debts is the way to go, others find that method impossible, Fréttabladid reports.

A mixed method of specialized debt adjustment and the increase of interest relief was discussed. It involves a lowering of the debt burden and lengthening of the loan period but no direct write-offs.

The banks say there is no room for further write-offs. According to information from the Financial Supervisory Authority, the new banks bought the mortgages at 72 percent of the old banks’ claim value on average. The bank rate was ISK 90 billion (USD 798 million, EUR 586 million) in total.

Another idea is to lower interest rates to three percent. Hrafn Magnússon, managing director of the Icelandic Pension Funds Association, does not favor that method.

“A lowering of the interest rates leads to a curtailment of the rights of the funds’ members and not much is gained if we lower the interest rates while cutting the rights at the same time, then we have gone full circle,” Magnússon commented.

Ombudsman of debtors Ásta Sigrún Helgadóttir and spokesman of consumers Gísli Tryggvason both suggested that a four to five-person task force be established to reach a final conclusion in the matter.

The task force would be comprised of members of the government, the opposition, lenders and debtors and Tryggvason also suggested a representative of the Supreme Court.

Prime Minister Jóhanna Sigurdardóttir did not like the idea, saying it is time that politicians reach a conclusion in this matter.

Click here to read more about the household debt problem.

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