Varieties of housing finance in historical perspective: The impact of mortgage finance systems on urban structures and homeownership

In this paper, we argue that the complexion of housing finance systems in OECD countries, both now and historically, has a significant bearing on a number of core housing-related indicators, including housing form, tenure composition, and urban development. Existing literature in the fields of housing studies and comparative political economy, however, has often neglected the historical dynamics of housing finance, while contemporaneously, financial historians have focused almost exclusively on company and not mortgage finance. We identify four different "ideal types" of housing finance systems that developed in mature capitalist economies when organized housing finance institutions began to emerge throughout the long nineteenth century: informal person-to-person lending and state lending as solutions outside specialized banking circuits, and deposit-based and bond-based institutions as banking solutions. We adapt Alexander Gerschenkron's theory of economic backwardness in order to explain the temporal-spatial emergence of these distinct types. We draw a path-dependent conclusion, noting that the more countries developed bond-based mortgage banks in the nineteenth century, the more they tended towards multi-story building structure, low homeownership rates and lower securitization levels in the twentieth century. A collection of unique historical city and country data supports these findings.