price-level adjusted mortgage

English Definition

A mortgage whose principal is periodically adjusted for inflation through a price index, so as to keep the real payment stable; it is used in high-inflation economies to preserve affordability. A PLAM shifts inflation risk onto the borrower's growing nominal balance: the real instalment stays constant while the nominal debt burden rises over time. This real-payment logic structurally resembles indexed infrastructure debt whose principal accretes with CPI, and represents the project finance counterpart of the same question — on whom inflation is loaded — which determines whether the lender or the obligor bears the erosion of purchasing power.