Icelandic pension funds reach state mortgage support agreement with govt

The Icelandic Minister of Finance and Economic Affairs has signed an agreement with 12 pension funds regarding the support of the state fund for housing loans to individuals in Grindavík.

The agreement aims to enable the Treasury to support property owners in Grindavík who have fallen outside the scope of other mortgage lenders regarding the cancellation of interest and price improvements on their loans.

Under the agreement, the Treasury will pay the accrued interest and price compensation from the mutual fund loans of individuals for their property in Grindavík for six months.

The support is limited to accrued interest and price improvements on mutual fund loans up to ISK 50m for the maturity date in December 2023 through May 2024.

To be eligible, the borrower’s property must be for their own use.

The support of the Treasury covers mortgage holders whether they have requested payment protection from the pension fund or not.

At the point of settlement, the borrower must be as financially well off as if the accrued price compensation and interest on their loan had been paid over the period of the agreement.

However, Treasury support does not cover the repayment of the principal of mutual fund loans.

It was estimated that the agreement will cover between 150 and 200 member loans and the support of the Treasury for the remedy will cost between ISK 120m and ISK 150m.

The agreement is subject to authorisation in the Budget and mortgage holders must contact the pension funds about the remedies.



Share Story:

Recent Stories


Podcast: The benefits of private equity in pension fund portfolios
The outbreak of the Covid-19 pandemic, in which stock markets have seen increased volatility, combined with global low interest rates has led to alternative asset classes rising in popularity. Private equity is one of the top runners in this category, and for good reason.

In this podcast, Munich Private Equity Partners Managing Director, Christopher Bär, chats to European Pensions Editor, Natalie Tuck, about the benefits private equity investments can bring to pension fund portfolios and the best approach to take.

Podcast - The power of three: Using Common Contractual Funds to improve tax outcomes for investors
Large asset owners are still investing in equities in a way where they are taxed on their income. The implication is that they get a poorer return. They need to, and can, improve this, but how?

In this podcast, AMX Head of Client and Manager Development, Aaron Overy, and AMX Product Tax Specialist, Kevin Duggan, discuss with European Pensions Editor, Natalie Tuck, about three options to help ensure good withholding tax outcomes for institutional investors.

Mitigating risk
BNP Paribas Asset Management’s head of pension solutions, Julien Halfon, discusses equity hedging with Laura Blows