The 30-year amortizing fixed-rate mortgage originated as a Great Depression policy response: borrowers were defaulting on five-year balloon mortgages with no principal amortization, so the government created the FHA and the savings-and-loan system (under the Federal Home Loan Bank Board) to promote amortizing, fixed-rate, 30-year loans that removed interest-rate risk from borrowers.
factualpending
Speaker
Arnold KlingEvidence Quote
“the government says no we don't like that we'd like amortize a mortgages where people pay off some of the principal gradually... and we'd like them to be over thirty years and with fixed interest rates... so they set up FHA”
Created: 6/13/2026, 7:04:06 PM
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