Bank rule change reduces number passing affordability checks

Fewer people are now passing affordability assessments after rules on shared ownership in home purchases were changed, mbl.is reports. Rannveig Eir Einarsdóttir, chief executive of Reir verks, said the Central Bank’s interpretation of shared ownership stakes had led to the decline.

“We saw a great deal of interest when we launched this and sold a considerable number of properties through REIR20,” Einarsdóttir said.

She said people who joined the scheme at the beginning were pleased and grateful to have left the rental market. Some had been making payments towards their REIR20 ownership stake to increase their share faster than originally planned while also reducing their rent.

According to Einarsdóttir, this type of property transaction has not been extensive enough to threaten financial stability. She said it was a necessary addition to the housing market that served both buyers and sellers.

“It is strange that young people who want to own a home are not allowed to set themselves a goal and spend a larger share of their disposable income for a few years to acquire housing,” she said. “It has never been easy and is not supposed to be, but I think the Central Bank is going too far into paternalism here.”

The issue is discussed in greater detail in Morgunblaðið.