Mortgages
A loan secured by the house it bought. Latin for 'dead pledge' — the pledge dies when the debt is paid, or when you lose the house.
The invention
The problem. Land was the only real wealth and could not be sold quickly, but debts came due on schedule.
English common law developed the mortgage as a conditional conveyance, the lender holding title until repayment. The thirty-year fixed amortising mortgage most Americans think of as normal was a 1930s New Deal invention, created because the previous standard of five-year interest-only balloons was destroying households during the Depression.
Deed of Settlement.
1836-01-01 · Library of Congress · Public domain
[Wojenski House. Interior and construction]
1940-01-01 · Library of Congress · Public domain
Where it has failed
Not a list of disasters. A pattern library.
- 1930sUnited States
The balloon that popped
Short interest-only mortgages required refinancing every few years. When credit froze, mass foreclosure followed and the long fixed mortgage was created in response.
The 'normal' mortgage is a deliberate policy artifact, designed after the previous normal failed catastrophically.
- 1989–1995Japan
The land bubble
Tokyo land prices reached levels implying the Imperial Palace grounds outvalued California; the collapse took decades to work through.
Property collateral is only as good as the price assumption underneath it, and that assumption can be wrong for thirty years.
- 2007United States
Subprime
Loans underwritten on the assumption prices would keep rising, bundled into securities rated as though defaults were independent.
Correlation is the thing that kills portfolios. Every loan in the pool depended on the same house price assumption.
Where it stands today
You now have the shape. Here is the reading.
Live from public data, pulled at request time. Read it with the failures above in mind — not because a repeat is due, but because knowing the mechanism is what lets you recognise one early.
30-year fixed mortgage average
Freddie Mac via FRED
No data returned
FRED (St. Louis Fed) needs FRED_API_KEY in your environment. It is free to obtain — see the sources screen for the link.
Freddie Mac via FRED
Case-Shiller national home price index
S&P Dow Jones Indices via FRED
No data returned
FRED (St. Louis Fed) needs FRED_API_KEY in your environment. It is free to obtain — see the sources screen for the link.
S&P Dow Jones Indices via FRED
In your ledger
Usually the largest contractual line in a household ledger — fixed amount, fixed date, and the one obligation that does not flex when income does.
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