Improving housing finance in an inflationary environment: alternative residential mortgage instruments
Alternative mortgage instruments are mortgage
plans designed to accommodate better
than traditional mortgages the current needs
of residential mortgage borrowers, mortgage
lenders, or both. The long-term fixed-rate,
fixed-payment mortgage became the prevalent
type in the United States in the 1930s and
served both borrowers and lenders well as
long as price and interest rate movements
were relatively small. But recent increases in
the level and volatility of market interest rates
have made this mortgage contract less desirable
to lender and borrower alike.
