The action has the greatest weight for people on average incomes – with full utilization of the correction, the principal of housing loans decreases by up to 20%.

Sigmundur Davíð Gunnlaugsson, Prime Minister and chairman of the Framsókn party, and the Minister of Finance and Economic Affairs, along with the project management for principal correction, presented today the results of the debt correction at a meeting in Harpa.

• Here you can access the slides from today's meeting.

The measure is most significant for people with below-average incomes, who were under forty at the time of the crash, have little equity in their housing and owe between 15 to 30 million kronur.

Loans will be split into two parts, original and correction loans, and the debtor will only pay off the original loan from the point of division of the loan.

The correction reduces the principal of housing loans by 150 billion kronur over the next 3 years, and at full utilization of the correction, the principal of housing loans will be reduced by up to 20%.

With the direct and indirect contribution of the government, all inflation above 4% in the years 2008-2009 is fully reversed. The equity situation of 56,000 households will be directly strengthened, and about 2,500 households will move from having no equity in their property to a positive equity position.

The financing period of the measures will be shortened from three years to one. This ensures better use of funds that would otherwise have gone to interest payments to financial institutions and enables the government to pay higher amounts into the principal of loans. 40 billion will be paid into the correction loans this year, 20 billion at the beginning of next year, and 20 billion at the start of 2016.

The correction thus strengthens the foundations for further economic growth and eases the debt burden of households. Strong economic growth and low inflation can further support the equity situation of Icelandic households in the coming quarters.

Personal pension contributions to the principal will begin at the beginning of the next month and principal reduction through the correction method following the confirmation of the debtor in December. Each individual can familiarize themselves with the results of the principal reduction of their loans on leidretting.is from 11 November onwards.

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