Characteristic of Mortgage Loans and a New Solution
https://doi.org/10.21686/10.21686/2073-1051-2019-4-161-180
Abstract
As the population of the world continues to grow and living standards continue to improve, we must find an adequate solution for housing issues. The first part of this paper tried to shed more light on the drawbacks and the past anomalies of the world mortgage market. We observed different continents and tried to point out the main causes behind the bottlenecks of mortgage markets. The reasons varied across countries but some similarities emerged, such as that in the initial period repayments places a huge financial burden on households. The second part of the paper introduces a new mortgage market formula which is based on the concept of “continuity of the present value of the repayments”. This solution provides lower and, in present value terms, even initial monthly repayments for the borrower. The new approach offers an alternative to renting and could serve as a good tool to help achieve home ownership, as well as lead to a healthier global mortgage market.
About the Authors
L. Kovacs
University of Miskolc
Hungary
Hungary
Kovacs Levente - Secretary General of the Hungarian Banking Association, Associate Professor and Head of the Finance and Accounting Institute.
Miskolc-University Town, H-3515.
S. Pasztor
National University of Public Service
Hungary
Hungary
Pasztor Szabolcs - Assistant Professor at the Department of International Economics.
2, Ludovika square, Budapest, H-1083.
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Review
For citations:
Kovacs L., Pasztor S. Characteristic of Mortgage Loans and a New Solution. Federalism. 2019;(4):161-180. https://doi.org/10.21686/10.21686/2073-1051-2019-4-161-180
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