The government signed a declaration of intent along with the pension funds and loan institutions on an action plan to solve the problems of indebted households earlier today.
From the Reykjavík district of Grafarholt. Photo by Páll Stefánsson.
It includes that debtors in severe payment difficulties can lower their mortgages down to 70 percent of the value of their properties.
A statement from the government reads that around 60,000 homeowners will benefit from the action plan, ruv.is reports.
The government is also planning to maintain interest relief and establish a new form of temporary down payment of interests which financial companies and pension funds will cover.
The cost of this item is estimated at ISK 6 billion (USD 52 million, EUR 39 million) per year over the next two years.
Furthermore, the declaration includes that the pension funds will accommodate social housing resources by purchasing property commercial papers from the state-run Housing Financing Fund.
The value of the commercial papers will be used to refinance receivable social apartment rentals and finance a system of residential rights.
The declaration of intent calls for further implementation, after which an actual agreement will be signed.
Click here to read more about housing problems.