If we built the mortgage market from scratch, what would it look like?

"Rules, products, and features exist because of past events, a crisis, a policy choice, or a market failure. The result is a structure that reflects history more than design. That doesn't make it bad, but it does mean we carry baggage that limits what the system could be. Around the world, mortgage markets are defined by their history The U.S. introduced the 30-year fixed-rate mortgage during the Great Depression, as a policy response to stabilize households and lenders in the face of mass foreclosures."

"In Israel during the 1980s, hyperinflation gave birth to CPI-indexed principal loans, aligning debt obligations with real prices to preserve the system's viability. In the UK, the high and volatile inflation of the 1970s and early 1980s pushed the system toward variable-rate mortgages, where the risks of interest rate movements were shifted more directly to households. Every country has similar stories products and structures built as reactions to the crises of their time."

"Over decades, these layers of responses have hardened into a patchwork system that is increasingly difficult to reform. What worked to solve yesterday's problem may no longer be fit for today's challenges, but inertia and legacy make change hard. Homeownership is remarkably sticky Over time, ownership rates barely shift unless something fundamental changes in the financing system. From 1750 through the Great Depression, U.S. homeownership hovered at around 46.5% 1.5%."

Mortgage markets develop as patchworks of rules, products, and features created in response to past crises, policy choices, or market failures, producing structures shaped by history rather than deliberate design. Different countries carry distinctive legacies: the U.S. adopted the 30-year fixed-rate mortgage during the Great Depression; Israel introduced CPI-indexed principal loans amid 1980s hyperinflation; the UK shifted toward variable-rate mortgages after 1970s–1980s inflation. Over time, layered responses harden into systems that resist reform because of inertia and legacy. Homeownership rates remain remarkably sticky and only rise when financing systems experience major systemic redesign. Significant mid-20th-century policy and financing changes drove the U.S. ownership increase from about 45% to 65%.

Read at www.housingwire.com