On This PageVol. 5, No. 2

Improving housing finance in an inflationary environment: alternative residential mortgage instruments
Last Updated: 07/06/81
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.