Prime Minister Geir H. Haarde and Foreign Minister Ingibjörg Sólrún Gísladóttir unveiled extensive measures at a press conference on Friday, aimed at helping the general public cope with the impact of the economic crisis.
Prime Minister Haarde and Foreign Minister Gísladóttir at a press conference on October 24. Copyright: Icelandic Photo Agency.
These measures include:
Homeowners can apply for delaying up to 10 percent of monthly downpayments of indexed mortgages as of December 1 and up to 20 percent of monthly downpayments as of January 1.
According to Morgunbladid, this is undertaken so that the debt burden does not exceed monthly salaries, which would inevitably happen in some cases with rising inflation.
“It can make a considerable difference to the debt burden of homeowners,” said Minister for Social Affairs Jóhanna Sigurdardóttir.
“We celebrate this step which is important and will help homeowners to cope better with the problem they are about to face,” said Gylfi Arnbjörnsson, president of the Confederation of Labor (ASÍ). ASÍ assisted the government in coming up with this plan.
However, this is just delaying downpayments and the capital of the mortgage continues to grow, so it is only recommended that people apply for this solution if they cannot possibly cover the monthly downpayments of their mortgages, as revealed on RÚV’s political chat program Silfur Egils on Sunday.
The Housing Financing Fund (HFF) will be permitted to rent people the apartments that they lose to the fund due to debt. People can thus continue to live in the same place, even if they have lost the ownership of it.
It will become illegal to even-out interest relief against downpayments of loans at HFF and penal interests will be lowered, which is believed to be of significant importance for families and small companies.
Child benefits will from now on be paid on a monthly basis instead of every three months as they have been until now.
Among other measures that have been discussed in the cabinet, is the decision to permit people to use their additional pensions to pay back loans.