To get away from mum and dad

Buying your first property is a big and exciting step, but for many young Icelanders, it often seems almost an impossible task. High property prices, strict loan regulations, and ever-increasing daily expenses have made it difficult for many young people to buy their first apartment without assistance. However, the authorities have taken measures to make it easier for first-time buyers to enter the property market. With the right resources and policy focused on people's realities, it is possible to break down these barriers and ensure that more people can own their own homes. However, the resources are not useful to us if we are unaware of them. Let's go over the resources available to us today:

Housing loans and support resources: What's available?

One of the biggest obstacles for first-time buyers is being able to secure a loan on manageable terms. Banks often set strict conditions that make it difficult for young people to enter the property market. Therefore, the authorities have introduced several resources to facilitate people's first purchases:

1. Shared ownership loan – the state loans instead of parents

Shared ownership loans are a resource that Framsókn worked on and help those who do not have the opportunity for family support in purchasing property. In simple terms, it works by the state lending part of the purchase price instead of parents providing equity.

Here are the key points:

• Shared ownership loans are only for first-time buyers or those who have not owned property in five years.

• The state lends up to 20% of the property's purchase price, or up to 30% if the property is in a rural area.

• Loans are interest-free and do not require monthly payments, unlike traditional bank loans.

• Loans are repaid after 10 years or when the property is sold, based on the property's value at that time.

This resource has proven useful to many and has enabled people to own their first apartment without having to save huge amounts for a down payment.

2. Non-indexed loans with fixed interest – Framsókn's new proposal

Another major challenge for young home buyers in Iceland is that most home loans are indexed, meaning the principal of the loan can increase over time. In many neighbouring countries, it is common for people to be able to secure non-indexed loans with fixed interest rates for the long term, making the payment burden more predictable and ensuring financial stability for households.

Framsókn has introduced a proposal calling for banks to be required to offer home buyers non-indexed loans with fixed interest rates for the long term. This would mean that people could take out loans where the interest rates are fixed for the duration, providing better oversight of their payment burden.

This is an important change that would make the property market more stable and easier for young people to navigate. Today, interest rates can rise suddenly, causing significant financial difficulties, but with fixed rates, the payments would always be the same, increasing the security of homeowners.

Utilising private pension savings can also be an important factor in saving for a down payment or paying down a loan, and the authorities have extended a resource that allows people to use these savings tax-free for purchasing their first property.

Finally – the right path to your first home

Owning your first property is a challenge, especially in the current economic climate, but not impossible. Good financial planning, the right mindset, and some sacrifices are necessary first steps, but often more is needed. By utilizing resources such as shared ownership loans and private pension savings and by keeping an eye on market developments, opportunities can be found.

The future is also brighter for first-time buyers if Framsókn's proposal for non-indexed loans with fixed interest rates becomes a reality. These changes would make it much easier to plan property purchases, avoid fluctuations in payments, and build a secure future home.

The key is not to give up. It can take time to save and find the right property, but with resourcefulness and use of the resources available, you can get into your own apartment and finally escape the rental cycle or move out from your parents.

Ingibjörg Isaksen, Chairman of the Framsókn Party Parliamentary Group. 

The article was first published on visir.is on 10 March 2025.