More Mortgages and More Homes? the Effect of More Finance on Homeownership in OECD Countries across the Last Century

Recent research has emphasized negative effects of finance on economic phenomena and spoken of a "finance curse." As one main driver of a growing financial sector, mortgage finance has traditionally been hailed to increase the widely regarded homeownership. This paper uses long-run panel data on 17 countries between 1920 (1950) and 2013 to show that the effect of the "great mortgaging" on homeownership rates is not universally positive. Debt appears to be neither necessary nor sufficient for higher homeownership levels. Rather, there have been periods of rising homeownership levels without much increase in mortgages before 1980 and mortgage increases without homeownership growth but house price bubbles thereafter. The liberalization of financial markets might after all not replace traditional housing policies.