History of Mortgage in Timeline

A mortgage is a loan secured by real property, used to purchase real estate or for other purposes by leveraging existing property value. It involves a lien on the property, granting the lender the right to seize and sell the property if the borrower defaults. The term originates from the medieval Law French "death pledge," signifying the pledge ends upon fulfilling the obligation or foreclosure. Essentially, it's a borrower providing collateral in the form of their property for a loan.

1946: Creation of CMHC

In 1946, the Canada Mortgage and Housing Corporation (CMHC) was created by the Canadian federal government to address the post-war housing shortage and to help Canadians achieve their homeownership goals.

1977: Building Societies Dominate UK Mortgage Market

In 1977, building societies held 96% of the new mortgage loans market in the United Kingdom.

1987: Decline in Building Societies' Share

Between 1977 and 1987, the share of new mortgage loans held by building societies in the UK fell from 96% to 66%, while that of banks and other institutions rose from 3% to 36%.

2003: Finance Act Removes Dual Stamp Duty Application in the UK

In 2003, the Finance Act in the United Kingdom removed the dual application of stamp duty in Islamic mortgage transactions to facilitate their use.

2004: Mortgage Systems Compared

In 2004, a UN study compared German, US, and Danish mortgage systems, noting varying interest rates and fees in each country. Germany's Bausparkassen reported 6% interest rates plus fees, while US rates, after starting high in the 1980s, also reached 6% but with higher gross borrowing costs. Denmark's rates were similar to the US at 6%, plus risk and acquisition fees.

2007: Popularity of Fixed-Rate Mortgages in the UK

From 2007 to the beginning of 2013, between 50% and 83% of new mortgages in the UK had initial periods fixed.

2007: Subprime Mortgage Crisis

In 2007, the US mortgage sector experienced the subprime mortgage crisis.

2007: Covered Bonds Market Volume

In 2007, the covered bonds market volume in the European Union amounted to about €2 trillion.

July 28, 2008: US Treasury Attempts to Kick Start Market for Securities

On July 28, 2008, US Treasury Secretary Henry Paulson announced that, along with four large U.S. banks, the Treasury would attempt to kick start a market for these securities in the United States, primarily to provide an alternative form of mortgage-backed securities.

October 10, 2008: George Soros Promotes Danish Mortgage Model

On October 10, 2008, George Soros promoted the Danish mortgage market model in The Wall Street Journal.

2008: Financial Crisis Highlighted Regulatory Failings

The 2008 financial crisis highlighted regulatory failings.

2010: Foreclosure Crisis

In 2010, the US experienced the foreclosure crisis, which followed the subprime mortgage crisis of 2007.

2012: Consideration of CMHC Privatization

In 2012, former Finance Minister Jim Flaherty publicly mused about privatizing the Crown corporation, CMHC.

2013: Popularity of Fixed-Rate Mortgages in the UK

From 2007 to the beginning of 2013, between 50% and 83% of new mortgages in the UK had initial periods fixed.

2013: Establishment of FCA and PRA

In 2013, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) were established in the UK.

April 2014: OSFI Releases Mortgage Insurance Guidelines

In April 2014, the Office of the Superintendent of Financial Institutions (OSFI) released guidelines for mortgage insurance providers aimed at tightening standards around underwriting and risk management.

October 2016: Introduction of Mortgage Stress Test in Canada

In October 2016, Ottawa introduced a mortgage stress test in Canada to cool down real estate prices. The stress test requires every home buyer who wants to get a mortgage from any federally regulated lender to undergo a test in which the borrower's affordability is judged based on a rate that is not lower than a stress rate set by the Bank of Canada.

May 2018: Peak of Stress-Test Rate

In May 2018, the stress-test rate consistently increased to its peak of 5.34%.

July 2019: Decrease in Stress-Test Rate

In July 2019, the stress-test rate decreased to 5.19% for the first time in three years.

December 2019: Review of Mortgage Stress Test

In December 2019, Canada's finance minister Bill Morneau ordered a review of the mortgage stress test due to criticisms from the real estate industry.