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An Alternative for Future Lending: Income-Linked Repayments

Author

Listed:
  • 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
    as

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    File URL: https://hitelintezetiszemle.mnb.hu/sw/static/file/fer-24-3-st5-incze.pdf
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    References listed on IDEAS

    as
    1. Daniel L. Greenwald & Tim Landvoigt & Stijn Van Nieuwerburgh, 2021. "Financial Fragility with SAM?," Journal of Finance, American Finance Association, vol. 76(2), pages 651-706, April.
    2. Daniel Winkler & Donald Jud, 1998. "The Graduated-Payment Mortgage: Solving the Initial Payment Enigma," Journal of Real Estate Practice and Education, Taylor & Francis Journals, vol. 1(1), pages 67-79, January.
    3. Sanders, Anthony B. & Slawson, V. Jr., 2005. "Shared appreciation mortgages: Lessons from the UK," Journal of Housing Economics, Elsevier, vol. 14(3), pages 178-193, September.
    4. Péter Fáykiss & Alexandr Palicz & János Szakács & Márton Zsigó, 2018. "Experiences of Debt Cap Regulations in Hungarian Retail Lending," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 17(1), pages 34-61.
    5. Sanders, Anthony B. & Slawson, V. Carlos, Jr., 2005. "Shared Appreciation Mortgages: Lessons from the UK," Working Paper Series 2005-16, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    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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