ABSTRACT
The recurrent crises which have-plagued the housing industry can be largely traced to the interaction of a rising and variable rate of inflation with two major institutional features which have characterized the financing of housing in the United States in the postwar period. These are almost exclusive reliance on the traditional fully amortized, level-payment mortgage as the vehicle for financing the acquisition of single-family houses; and overwhelming dependence for mortgage funds on thrift institutions which secure the bulk of their funds through relatively short-term deposits. By far the largest share of private mortgage funds, especially those financing owner-occupied housing, has come from the thrift institutions—savings and loan associations and mutual savings banks—and to some extent from commercial banks and life insurance companies. A higher inflation, results in a more rapid decline in the outstanding debt. Correspondingly, the owner's equity also builds up more rapidly, if the value of the house remains constant in real terms.
