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An Alternative for Future Lending: Income-Linked Repayments

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  • Zsombor Incze

    (University of Miskolc, OTP Bank Retail Division)

Abstract

The study presents the most typical domestic and international trends in mortgage lending models and product development through a literature review of their historical evolution. It concludes that innovations concerning the basic structure of mortgage loan products have not spread in the Hungarian market, although recent academic literature has proposed such developments. Building on one of these academic innovations, a mortgage product based on income variation over the career cycle is developed. This product is examined through the Hungarian medical wage scale and the Magyar Nemzeti Bank's housing affordability methodology. The findings suggest that, with timely and forward-looking financial planning, a household consisting of early-career physicians could potentially afford to purchase a home, suitable for raising children, as their first property.

Suggested Citation

  • Zsombor Incze, 2025. "An Alternative for Future Lending: Income-Linked Repayments," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 24(3), pages 95-122.
    • Handle: RePEc:mnb:finrev:v:24:y:2025:i:3:p:95-122
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    Keywords

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    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G50 - Financial Economics - - Household Finance - - - General
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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