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The History Of Mortgages

Although there are more homeowners in the UK today, that wasn’t the case centuries ago. One leading factor contributing to the increase in homeownership over the years is mortgages. But the funny thing is that mortgages are not recent solutions to home ownership. They can be traced as far back as the 12th century. Let’s look into the history of mortgages and how it has evolved over the years.

Early Origins

Back then, a mortgage was a piece of land or any other property used as collateral for debts. These property titles were usually returned to the owner once they had fully repaid their debts. The word “mortgage” is of French origin, which means “dead pledge” when loosely translated. In the earlier times, it was used against the term “life pledge,” which meant that borrowers could use the profits generated from their land to settle their debts. For mortgages, however, borrowers had to look for other sources of income to pay off any debts. Several issues came with these debt systems, and it wasn’t until the 19th century that mortgages became popular again.
In the late 1910s, most British people were living in rented homes. However, that all changed when the government passed the Housing and Town Planning Act to build homes at more subsidised costs. This programme, known as the “Home for Heroes,” was designed for soldiers who had fought in the just-ended First World War and were entitled to affordable housing. It created a housing boom that continued into the 1930s since families now had access to low-interest loans to build new homes.

Home Ownership Boom In The 1930s-1980s

By the late 1930s, homeownership rates had increased. Unfortunately, it stalled when the Second World War began. After the war, Britain focused on replacing homes that had been destroyed during the war. While numerous challenges existed, the government built millions of council homes over the next decade.

Britain enjoyed an economic boom between the 1950s and 1960s. People were more encouraged to take out mortgages due to the low prices of homes and lower interest rates. Thanks to several social interventions and legislations in the 1970s, many Brits were more capable of buying their homes.

The Downward Spiral Of Home Ownership

As the population grew, many banks in the 1990s were forced to increase their shares in the mortgage market as the demand for homes increased housing prices. Mortgages became less accessible after the 2008 global recession, and a lack of social housing made it more difficult for people to afford homes.

Recently, obtaining a mortgage has been less accessible to many people, with stringent checks and measures in place. As a result, many young adults are forced to live with their parents despite having stable jobs and salaries.

Recently, obtaining a mortgage has been less accessible to many people, with stringent checks and measures in place. As a result, many young adults are forced to live with their parents despite having stable jobs and salaries.
On the bright side, many banks offer different types of mortgages to potential homeowners, including guarantor mortgages, joint mortgages, and the equity release mortgage. While current housing and access to credit facilities are going through challenging times, it’s almost impossible to predict the future.

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