Find your way to off-the-beaten-path village Hvanneyri, 12km east of Borgarnes, and in among fjordside homes you'll find this fantastic wool centre. Handmade sweaters, scarves, hats and blankets share space with skeins of beautiful hand-spun yarn, and interesting bone and shell buttons. Plus there are needles and patterns to get you started.
Look out for local Borgarfjörður designs, featuring geese, ptarmigan or salmon. It also custom knits. It's part of the Agricultural Museum of Iceland (www.landbunadarsafn.is) complex.