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Frank Hovis

Iceland To Write €24,000 Off Every Household Mortgage

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Forget any notion of personal responsibility if you're Icelandic, borrow big, live for today, and the government will take money from anybody who has saved and give it to you. Or theft as it used to be known.

I genuinely never thought I would see a story like this.

Iceland to write €24,000 off every household mortgage

THE ICELANDIC GOVERNMENT has announced that it will write off household mortgage debt in order to kickstart the economy.

Under the plan, every household in the country will have €24,000 worth of debt written off.

The move was part of the election manifesto of the Progressive Party, led by Prime Minister Sigmundur David Gunnlaugsson.

The idea will cost the country €1.2 billion and will begin in mid-2014. Iceland has been burdened with debt since the 2008 financial crisis, which saw the krona collapse.

A government statement said that the plan would kick-start consumer spending.

“Currently, household debt is equivalent to 108 per cent of GDP, which is high by international comparison.

“The action will boost household disposable income and encourage savings.”

The plan has been criticised by the IMF, the OECD and various economists, with the IMF saying that the country has “little fiscal space” for the move, while the OECD says the plan should be limited to low income housing.

The measure has improved the country’s rating with Standard & Poor’s, who upgraded the economic outlook from negative to stable.

http://www.thejournal.ie/iceland-goes-against-international-concern-writes-off-debt-1203320-Dec2013/

Mods - merge if already up, the story is from Tuesday but I haven't seen it before.

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So, handing out a free 24k only to those who own property? To qualify for this handout, to kick start the economy, you have to be substantially in debt already?

What about giving 24k to those who have proven they can manage their finances, or a smaller sum to every citizen... surely they can all spend it, reinjecting it back into the economy?

Absolutely iniquitous.

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ah yes, but they are going to have to pay it all back in taxes.

somehow, not collecting all this interest is going to cost the Country....Im not sure why this is...but it looks like they are going to pay it back to the banks who do the forgiving.

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I'll hold judgement till the details emerge, but this seems like a shocking case of moral hazard - why not just gift everybody a set amount, regardless of their levels of debt?

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How dare a government help out its own people. The bankers are the only ones that should be given free money.

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How dare a government help out its own people. The bankers are the only ones that should be given free money.

"Its own people" being restricted to those with a mortage.

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How dare a government help out its own people. The bankers are the only ones that should be given free money.

Picking & choosing who 'deserves' government largesse in a big way, wouldn't you say? :)

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http://www.thejournal.ie/iceland-goes-against-international-concern-writes-off-debt-1203320-Dec2013/

Mods - merge if already up, the story is from Tuesday but I haven't seen it before.

Don't think you looked hard enough Frank. Iceland Government Launches Debt Relief Package For Households

From Nov 30th but no hard figures given as to what it would mean at the household level.

24k writedown hard to say how significant that would be without knowing how it will be applied, if it's on a 250k mortgage it's not a great deal, if however someone has a 50k mortgage a 24k reduction would be pretty significant.

I hope that those who have been paying off their mortgages aren't penalised ie get a smaller reduction because their mortgage is less as that's going to create real moral hazard.

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Don't think you looked hard enough Frank. Iceland Government Launches Debt Relief Package For Households

From Nov 30th but no hard figures given as to what it would mean at the household level.

24k writedown hard to say how significant that would be without knowing how it will be applied, if it's on a 250k mortgage it's not a great deal, if however someone has a 50k mortgage a 24k reduction would be pretty significant.

I hope that those who have been paying off their mortgages aren't penalised ie get a smaller reduction because their mortgage is less as that's going to create real moral hazard.

It didn't have as sensationalist a headline as mine to be fair :P

It's moral hazard anyway. If they want to boost the economy in a direct way give everybody £10k. Don't start selecting who gets it based on some flawed concept of deserving it.

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It didn't have as sensationalist a headline as mine to be fair :P

It's moral hazard anyway. If they want to boost the economy in a direct way give everybody £10k. Don't start selecting who gets it based on some flawed concept of deserving it.

Disagree a sensationalist headline would be - Reid flashes pants whilst announcing Iceland to write off 24K household mortgages!

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This is money stolen from foreigners, perfectly acceptable in Iceland who consider raping and pillaging a honorable tradition. Iceland is a gangster nation.

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This is only a small step on from HtB 1 and 2. George is already providing interest free deposits to people who have not saved for HtB 1 and taxpayer backed guarantees for HtB 2 borrowing. One part of the population being given money by the government with the other part of the population picking up the bill.

no parts of HTB whichever part are gifts.

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interest free deposit is not free money? borrow the cash for five years and then just pay back the principal with no interest, try that with a bank. The government give lots of free gifts for property purchases, FLS takes savers' interest and provides cheap mortgages to buy property, SMI uses taxpayer funds to pay peoples' mortgages when the property should be sold to meet their debts.

I would regard a five year interest free loan as being gifted money.

interest free for 5 years...after that its an exponentially rising cost...hardly free for the type of people who need it to get on the ladder, and there is another cost...the buying price is supported by all this.

You see, there is no such thing as a free lunch.

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Iceland's a bit different as the total population is only the equivalent of a largeish city in the UK eg Cardiff. Giving cash to debtors is a total moral hazard and I can't see any liklihood of helicopter money in the UK.....more likely there'll be a "bail in" with the theft of savers' cash if necessary. It's the sort of sneaky thing our banker politicians prefer. Anyway we don't need it we've got the highest growth in the western world, don't you know (sarcasm).

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There already is it's called Funding For Lending.

Plus the rape of the savers, secret bailouts by the BoE, ownership of certain failed banks, the list goes on and on.

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Better yet, why not just cancel all debt and allow people to live rent free. The free money could then be invested in productive endeavour instead of lining the pockets of the undeserving. The real reasons house prices continue to inflate are 1) to pay boomer pensions 2) to line the pockets of greedy financial parasites.

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Ireland:

FAMILIES have been able to keep their health insurance and a second car in some of the first debt deals agreed with banks.

The first batch of 20 cases provisionally agreed to by banks also shows that families will have thousands of euro of credit card and credit union debts written off.

Most of the people who have had deals with banks processed by personal insolvency specialists Grant Thornton Debt Solutions are in families with children and work in the PAYE sector.

And most managed to keep their homes despite having crippling debts.

Details of the deals being hammered out with the banks emerged as the first personal insolvency deal to be formally signed off by the banks and the courts was finalised yesterday.

In that case, a Donegal man in his 40s had 70pc of his debts written off. The arrangement follows a protective certificate being issued by the Circuit Court in Monaghan in October.

It has now been signed off on by the courts.

Although every deal is set to be different, the Irish Independent can reveal details for the first time of the conditions imposed by banks agreeing to write off huge amounts of personal and mortgage borrowings.

The monthly living expenses being allowed by banks are far less draconian than at first feared.

One family on a combined €100,000 a year managed to get €233,000 written off from their home mortgage, buy-to-lets and credit card debts.

But they have surrendered their family home, along with the investment properties.

The family decided that they were so overwhelmed by their massive mortgage borrowings that they volunteered to hand back the keys to their homes in return for having a large chunk of what they owed written off.

Those who have surrendered their homes are understood to have done so by choice.

http://www.independent.ie/business/personal-finance/property-mortgages/families-keep-health-cover-and-second-car-in-bank-debt-deals-29783753.html

In the UK we have a council (or councils) offering interest free loans for 3 years for people with mortgage debt. What happens at the end of 3 years?

Families struggling to meet mortgage payments have been offered a helping hand.

It has come from Kirklees Council which has set up an interest-free loan scheme.

Working with other councils in the region, the authority is helping to run the Breathing Space Scheme.

It is there for people facing difficulties in paying a mortgage because of a drop in income.

The council is working with other local authorities in Yorkshire and Humberside to administer the Breathing Space Scheme.

A Breathing Space loan could pay a mortgage and/or secured loan arrears and up to 12 months instalments, depending on the individual’s circumstances.

The loan is interest and repayment free and secured against the property.

The amount people can receive is between £2,000 and £15,000 and will be decided by the council depending on people’s needs.

http://www.examiner.co.uk/news/west-yorkshire-news/kirklees-council-offers-emergency-loans-6257399

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Forget any notion of personal responsibility if you're Icelandic, borrow big, live for today, and the government will take money from anybody who has saved and give it to you. Or theft as it used to be known.

I genuinely never thought I would see a story like this.

http://www.thejourna...203320-Dec2013/

Mods - merge if already up, the story is from Tuesday but I haven't seen it before.

You're only looking at one side of the balance sheet. There are two sides. A debt and an asset.

So debt forgiveness whether by a haircut, maturity extension, rate reduction etc is also writing down the asset on the other side of the b/sheet, one way or another.

What happened in the UK for instance was the opposite of this. The asset side (savings) were bailed out 100% instead of being written down. In Cyprus for instance they wrote down the savings.

The fact is, one way or another, the savings have disappeared. Savers recklessly bought asset that were worth less than they paid for them, and thus savings must be written off too.

Writing down the debts and the assets makes perfect sense. It's a pity only Iceland and Cyprus so far seem to understand this, or have the guts to do it.

Edited by R K

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"Its own people" being restricted to those with a mortage.

maybe give everyone else one of those 1000hp dune buggies that i watched on top gear the other year. I think it's big in Iceland.B)

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maybe give everyone else one of those 1000hp dune buggies that i watched on top gear the other year. I think it's big in Iceland.B)

I think a building plot would be better compensation. I think a realisation that it has been an almighty F*CK UP and start from there and work forward. They may have to steal some land off someone to do it but when it is the people of Iceland that give the land value in the first place tough sh*t.

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