Increasing mortgages may put families at a close range

According to the director of the Institute of Economic Studies at the University of Iceland, those who recently signed non-indexed mortgages with variable interest rates may be in a difficult position. As interest rates rise, monthly payments could increase by tens of thousands of króna. cars

COVID is responded by the Central Bank

According to RÚV, the Central Bank reduced interest rates to historic lower rates last year to mitigate the impact of the COVID-19 pandemic. The cutbacks led to an immobilization boom, with many seeking to use low rates to secure roomer homes or finance refinancing. During the pandemic, the majority of new mortgages were not indexed with variable interest rates. Although initially payments are higher, such loans allow lenders to “own their homes sooner.”

But, with the recovery of the economy, the Central Bank has increased its interest rates by 0.25%, leading commercial banks to do the same. As economists expect inflation to continue well beyond target rates — despite a reinforcement of the crown — real prices will rise as wages, while employment will decline as raw commodities prices remain high.

The best time, the worst time.

These trends are putting pressure on the central bank to continue raising interest rates, which in turn will put pressure on commercial banks to do the same. This will affect the public directly, especially those signing variable interest rates for non-indexed mortgages.

“This could put them in a difficult position,” stated RÚV interviewed Sigurður Jóhannesson, Director of the University of Iceland’s Institute of Economic Studies. “These cautions had previously been raised to the effect that these types of mortgages looked good on paper due to the circumstances of last winter, but that they would not last forever. However, those unprepared for low interest rates and inflation can be placed in a hard place.”

ISK 25,000 increase per month

As stated in a recent Landsbankinn report, a 1 percent increase in non-indexed mortgage variable interest rates of ISK 30 million could lead to an increment of ISK 25,000 for monthly payments.

More landlords offering monthly sales based rental agreements to retailers!

When the COVID-19 pandemic was worst, a number of commercial landlords agreed to pay us a portion of your monthly rent rather than the normal amount to remain open.

But the Wall Street Journal reported on Tuesday, that seemingly temporary arrangement could be permanent (June 15).

“More owners of shopping centers sign new leases where rent is directly tied to a share of sales for at least a period,” according to the news outlet. “These rental percentages are especially attractive to newer retailers and offer flexibility to avoid large losses as they start.”

Many retailers have been pinched by eCommerce already and struggled even harder when the COVID lockdowns started. 73 percent of the country’s biggest retailers have closed most of their locations at the height of the pandemic. More than half of retailers sought rental relief.

When shops started to close, the landlords had more space than expected and had generous conditions — such as percentage leases — to find new tenants.
This is the latest example of practices that were considered temporary pandemic measures that were transformed into social fixtures, such as firms that let workers work from home and a continuous food supply growth despite the reopening of dinner services by restaurants.

However, this does not mean that fixed rental leases have disappeared, the news agency noted. The majority of rental agreements only apply to the first or so year of the lease before reverting to a fixed-rent model.

And without problems, these arrangements don’t come.
The sales of a store can be diagramsed to determine the amount of rent they owe because tenants do not always want to provide their landlords with access to sales details, except where they need a rent break due to the flagging business.

“Tenants love it, landlords hate it,” Michael Rielly, CEO of Rielly Retail Solutions, a retail and hospitality brand real estate consulting company, told the Journal.

A research and interview-oriented report examining how banks use artificial intelligence and other advanced computer systems to improve the management of credit risk and other aspects of their operations. The Bank Technology Roadmap The Playbook is based on a survey of 100 bank managers and is a component of a larger series evaluating AI’s financial, healthcare and other sector potential.