IngentaConnect The American Mortgage in Historical and International Context

Authors: Green, Richard K.; Wachter, Susan M.

Source: The Journal of Economic Perspectives, Volume 19, Number 4, Fall 2005 , pp. 93-114(22)

Publisher: American Economic Association

Abstract:

The U.S. mortgage before the 1930s would be nearly unrecognizable today: it featured variable interest rates, high down payments and short maturities. The authors compare the form of U.S. home mortgages today with those in other countries. The U.S. mortgage provides many more options to borrowers than are commonly provided elsewhere: American homebuyers can choose whether to pay a fixed or floating rate of interest; they can lock in their interest rate in between the time they apply for the mortgage and the time they purchase their house; they can choose the time at which the mortgage rate resets; they can choose the term and the amortization period; they can prepay freely; and they can generally borrow against home equity freely. They can also obtain home mortgages at attractive terms with very low down payments. The authors discuss the nature of the U.S. government intervention in home mortgage markets that has led to the specific choices available to American homebuyers. They believe that the unique characteristics of the U.S. mortgage provide substantial benefits for American homeowners and the overall stability of the economy.

The full text electronic article is available for purchase. You will be able to download the full text electronic article after payment.

$19.00 plus tax Refund Policy