Vaxtabæturnar hækka.

Because Icelandic usually puts the definite article onto the noun as an ending, instead of using a separate word like English the.

So:

• vaxtabætur = interest benefits / mortgage interest benefits
• vaxtabæturnar = the interest benefits

Here the ending -nar is the definite article.

Vaxtabæturnar is:

• plural
• feminine
• definite
• nominative in this sentence

It is nominative because it is the subject of the verb hækka.

The basic indefinite form is vaxtabætur. In this meaning, this word is normally used in the plural.

Yes. It is a compound:

• vaxta-
• bætur

This is very common in Icelandic. The last part of the compound is usually the main noun, and that is the part that gets inflected for things like the definite article.

So:

• vaxtabætur = the indefinite compound
• vaxtabæturnar = the same compound with the definite article added at the end

Because the first part comes from the genitive plural form vaxta, related to vextir.

Icelandic often uses a genitive form as the first element in a compound. That can look strange to an English speaker, because English compounds usually do not show this kind of case marking.

So the form vaxta- is not random; it is the expected compound form here.

Because the subject is third-person plural.

In the present tense:

• hann/hún hækkar = he/she increases
• þeir/þær/þau hækka = they increase

Since vaxtabæturnar is plural, the verb is hækka.

Yes. Hækka can be both:

• the infinitive: að hækka = to increase
• the 3rd person plural present: hækka = increase / are increasing

You know it is a finite verb here because it follows the subject and forms a complete sentence:

• Vaxtabæturnar hækka.

If it were an infinitive, you would normally expect að or another verb before it, for example:

• Vaxtabæturnar munu hækka. = The interest benefits will increase.

It can correspond to either, depending on context.

Icelandic simple present often covers both:

• English simple present: increase
• English present progressive: are increasing

So Vaxtabæturnar hækka could be understood as either The interest benefits increase or The interest benefits are increasing, depending on the situation.

Here it means increase / go up / rise.

In this sentence there is no direct object, so the verb is being used intransitively: the benefits themselves are going up.

English often separates these ideas more clearly:

• increase / rise = something goes up
• raise = someone causes something else to go up

In this sentence, it is the first idea.

Yes. Vaxtabætur hækka is the indefinite version.

The difference is:

• Vaxtabætur hækka = interest benefits increase
• Vaxtabæturnar hækka = the interest benefits increase

So adding -nar makes the noun definite.