So what is the bank going to do?
Atli Steinn Gudmundsson, a journalist at visir.is and Bylgjan stopped paying off his mortgage in March. “I would have to be a CEO of a large company to manage all those payments. It came to the point where I saw no sense in continuing to pay” he says to DV.is today.
Atli’s original loan was for 17 million ISK, but taken in foreign currency. Now it is 40 million. Interest payments have gone from 63 thousand ISK up to 130 thousand. He now has tenants in the apartment, and that prevents him from getting the loan frozen.
Gunnar Sigurdsson, director is a generation older than Atli but has taken the same decision. “My next step is to stop paying. I have paid tens and hundreds of thousands a month because of loans for several years. The only thing that happens is that the loans keep rising and rising. When I sat down and started adding things up, I reached the conclusion that I can just as well stop paying”.
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Bert Pachetta
1 year ago
Indexation of loans is not something that developed countries do! And they thought they could be international bankers? What a joke!
Bromley86
1 year ago
>Indexation of loans is not something that developed countries do! And they thought they could be international bankers? What a joke!
Whilst I agree, is there really any actual difference between the Icelandic system of indexation and the rest of the world?
As I understand it (which is probably imperfectly), Icelanders experienced a lower rate of interest on those ISK loans than they would otherwise have faced precisely because they were indexed.
No one is going to lend money for extended periods of time at less than inflation. So variable interest rates in the rest of the world effectively include indexation, whereas those in ISK Icelandic loans separate the two elements out.