hámarksfjárhæðir

Hámarksfjárhæðir is a Icelandic law that refers to the maximum amount of money that can be borrowed by an individual for the purpose of purchasing a dwelling. The law was enacted in response to the country's housing market boom in the early 2000s, which led to a significant increase in household debt.

Under Hámarksfjárhæðir, individuals are restricted from borrowing more than 4.5 times their annual income for the purpose of purchasing a home. This restriction is intended to prevent excessive borrowing and reduce the risk of default on mortgages. The law applies to all types of dwellings, including single-family homes, apartments, and condominiums.

The Hámarksfjárhæðir law is enforced by the Icelandic government's Financial Services Authority, which is responsible for regulating the country's financial institutions. The law requires financial institutions to assess the creditworthiness of borrowers and ensure that they are not taking on excessive debt.

In addition to the 4.5 times income rule, the law also includes other restrictions on borrowing, such as a requirement that borrowers demonstrate a sufficient down payment and a stable income. These restrictions are intended to prevent individuals from over-borrowing and to promote more responsible lending practices.

The Hámarksfjárhæðir law has been credited with helping to stabilize Iceland's housing market and reduce the risk of financial instability. By limiting the amount of debt that individuals can accumulate, the law has helped to prevent a housing market bubble from forming and has promoted more prudent lending practices among financial institutions.