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Roger
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A price-level-adjusted mortgage means a loan in which the interest rate is fixed, but the outstanding balance is periodically adjusted for inflation. Monthly payments are revised accordingly.
If the borrower's income increases with inflation, the increase of installments will not be a problem.
Mortgages with adjustable interest rates are usually more volatile, a price-level-adjusted mortgage is better in this sense. Drawback of this loan is that, while installments are low in the first years, they will be much larger than conventional loans in the later years. So it has good and bad features for borrowers. For lenders it is good, that they do not have to worry about inflation.
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