Mortgage Payments to Continue Rising in Iceland

Garðabær construction housing architecture

Steep interest rate hikes from Iceland’s Central Bank mean that many Icelandic families face much higher mortgage payments than they did one year ago. Doctor of Economics Ólafur Margeirsson, however, does not recommend those with non-indexed loans to refinance to indexed loans. Ólafur says ensuring more housing supply will be key in regulating the housing market.

The debt load of non-indexed loans in Iceland has risen by over ISK 100,000 [$709; €708] per month, in the case of an ISK 50 million loan with a variable interest rate of 3.4% taken in early 2021. “There are quite a few families who can’t afford an additional ISK 100,000 a month,” Ólafur told RÚV, saying there were two ways out of the housing market’s difficulties. “Firstly, we must encourage more supply of that which is lacking. And there is a lack of real estate in Iceland. There is a housing shortage so we must build more and continue building more. The other thing is limiting access to indexed loans in order for interest rate hikes to work.”

Central Bank will continue to raise rates to tackle inflation

Inflation has risen to 9.9% in Iceland, and the Central Bank Governor has stated that the bank will continue raising interest rates as much as necessary to tackle inflation. Ólafur did not recommend borrowers with non-indexed loans refinance over to indexed loans. “Remember that the principal on indexed loans increases. Try to pay off debts as quickly as you can, because then the impact will be less when the interest rate changes in the future.”

Ólafur added that housing would be a big issue in the coming wage negotiations this fall, suggesting that one solution is for “Icelandic pension funds, like pension funds in Europe, to invest in building new apartments in order to rent them out. With that, we are systematically increasing the supply of real estate, we are reducing pressure on rental prices, reducing the pressure on real estate prices, and with that, we are reducing inflationary pressure and interest rate pressure as well. This is a key point that must be discussed in wage negotiations.”

Steroids Use Growing in Iceland

A recent episode of news program Kveikur brought to light just how common steroid use is in Iceland, particularly among young men. Testosterone prescriptions have increased dramatically over the last decade, and are double the rate prescribed elsewhere in the Nordic region. Icelanders are also 50% more likely than individuals in other western nations to suffer from body dysmorphic disorder.

Hafrún Kristjánsdóttir is a psychologist and sociologist, as well as former athlete, who researches the behaviour of young men and athletes. She says men get the message from a young age that it’s important to be big and strong. “You are a five-year-old boy and your heroes in life are Superman, Batman, and Hulk, and men like that, and they are all on steroids. If you look at them. They have a big six-pack and they are swollen. And it’s not uncommon to see little boys in playschool flex their muscles and when they draw themselves, they’re drawing a six pack.”

Icelanders had such a role model in Jón Páll Sigarmsson, a strongman, powerlifter, and bodybuilder who was first in the world to win the World’s Strongest Man title four times. Steroid use is widely considered a factor in his early death at the age of 32. His son Sigmar Freyr Jónsson spoke frankly about his own use of steroids in the episode, saying although they first made him feel energised and confident, they quickly began to affect his quality of life. “When I was at my strongest and heaviest, I didn’t feel like I was strong,” Sigmar stated, describing negative side effects such as loss of sex drive and even breast development, which led him to undergo several surgeries. “I stopped using steroids for a whole year, and I was a little worried because I wasn’t yet 30 but I felt that my sex drive and virility didn’t come back for a whole year.” Sigmar stated. “It wasn’t a direct fear of death that made me stop. It was more just wanting a better quality of life.”

Brigir Sverrisson, CEO of the Doping Control Committee of the National Olympic and Sports Association of Iceland, says the organisation wants to work with gyms to combat steroid use. “Gyms have expressed interest in taking a stand against drug abuse and they have a lot of power to do so,” he stated.