6. Lessons Learned—Back to the Future

Financial innovation is imperative for promoting well-functioning housing markets. Changes in the increasing structural demand for capital in housing are demographically driven and shape market structure and performance.

As documented throughout this book, urbanization and household formation have driven financial innovation in housing markets throughout history—from the very first mortgages to covered bonds, guarantees, insurance, tax credits and subsidies, and secondary market development.

Regardless of geography, using cash alone to buy or build housing has long proven overly restrictive and prohibitively expensive. In earlier historical periods, specialized lenders charged interest rates that limited ...

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