Faroese households owe one billion kroner more than last year

Faroese households owed more than one billion kroner more in August than a year earlier, according to KVF. Total loans to households from Faroese financial institutions rose from 11.3 billion kroner to 12.4 billion kroner, an increase of 9.2 per cent.

An analysis by Landsbankin found that households paid an average interest rate of 3.97 per cent on home loans. Mortgage credit loans cost a similar amount, averaging 3.93 per cent in interest and contributions.

The analysis was conducted in August. Since then, all financial institutions have announced interest rate increases. Landsbankin says borrowers with debt of 2.5 million kroner reach the cap for interest subsidies when rates rise above 4 per cent. Ninety-two per cent of household debt in the Faroe Islands has a variable interest rate, the bank said.