Definition: A mortgage is a long-term loan that was designed to make home ownership more affordable. It was created after World War II by the U.S. government to encourage returning war veterans to buy homes being built in the suburbs, and to spur economic activity through the home construction industry.
The government developed special legislation to create savings and loans banks to issue these mortgages. Throughout the 60's and 70's, almost all mortgages were issued through [linnk url=http://useconomy.about.com/od/glossary/g/savings_loans.htm]Savings and Loans[/link] (S&L's). These banks were successful because people deposited funds in savings accounts. The government insured the deposits, so people used the accounts, even though the interest earned was very low. This was also regulated by the government, so that the S&L's could stay remain profitable by paying lower interest rates on deposits than they charged on the mortgages.
There are now many types of mortgages, including conventional 15-year and 30-year fixed interest mortgages, variable-rate mortgages, and interest-only loans.
Also Known As: home loans
Examples: Without mortgages, most people could never save enough to buy a home.
