Icelandic Banks See Construction Arrears Nearly Triple as High Rates Leave Unsold Apartments
Updated
Updated · Iceland Monitor · Aug 18
Icelandic Banks See Construction Arrears Nearly Triple as High Rates Leave Unsold Apartments
1 articles · Updated · Iceland Monitor · Aug 18
Summary
Construction-sector arrears at Iceland’s three largest commercial banks nearly tripled in the first half, underscoring what industry leaders called a dire housing-market situation.
High interest rates have made project financing harder for developers, leaving completed apartments unsold and forcing builders including ÞG Verk to slow development.
The Federation of Icelandic Industries urged the Central Bank to hold its key rate unchanged at its Aug. 19 decision, arguing another hike could over-tighten policy even with inflation still above target.
The surge in arrears points to broader stress in Iceland’s housing and construction markets, where financing costs are now feeding directly into stalled sales and weaker building activity.