What was the mortgage in different historical eras

Modern financial instruments have radically changed the attitude of a person to his own economy. Take the same mortgage: it allowed people to buy housing and other real estate on terms that were simply impossible before. Let's figure out how the mortgage issue was arranged in different eras, in order to understand how much it helped people improve their lives.

1. Paleolithic and earlier

Scientists know quite little about how family and economic life was arranged in prehistoric times. Archaeologists and paleogeneticists, at best, can reconstruct the size of human groups, their genetic similarity and occupation.

In order to reconstruct the customs of the Paleolithic people, they usually look at the more or less modern tribes of hunter-gatherers (for example, the Guaiac people living in the territory of modern Paraguay). But it seems that ancient people were prone to patrilocality - a type of family relationship in which a woman goes to the tribe of her husband's father (if the concept of "husband" in our sense is generally applicable to such antiquity). Well, they definitely had exogamy - a ban on closely related marriages. In general, I had to live with my parents.

If there was a modern mortgage: perhaps a few families could have taken out mortgages on food, clothing, and weapons and formed a new tribe. In much the same way as now young families are amicably settling in new buildings. As a result, the members of the new tribe would have an entourage of the same age.

2. In Ancient Greece

Actually, the word "mortgage" is of Greek origin and is translated as "foundation", "pledge", or even "warning". That was the name of the pillar, which was installed on the border of the land plot, so that it "warned" that this site serves as a security for the debt.

Thus, among the Greeks, the mortgage was a form of property liability of the debtor to his creditor: in case of non-payment, the creditor had the right to take back the mortgaged land. Before the development of mortgages, the insolvent debtor was liable to the creditor with personal freedom, therefore the mortgage was a more progressive measure of economic relations.

Naturally, for this, a developed institution of private land ownership had to exist in Greek society. In 621 BC, the Athenian ruler Drakont compiled the first set of written laws (yes, the very draconian measures), which severely punished any encroachment on someone else's property. This gave impetus to the development of credit and debt relations, which were secured by the land. The Greek mortgage was fully operational at the beginning of the 6th century BC.

But such a mortgage was not available to everyone: to use it, it was necessary to own your own allotment.

The eldest son in the family was the heir to his father's estate, so he could bring his wife to his parents' house, which later, together with the land, passed into his ownership. It was he who could count on a mortgage in the future, which, in fact, he no longer really needed.

But the younger sons in this sense were disadvantaged and could either be content with plots of land, or enter the service of the rich, or seek their fortune in the colonies. All this was not very conducive to the creation of a family at a relatively young age.

If there was a modern mortgage:the opportunity to first get land in his hometown, and then pay off the debt for it in money or service would have turned the life of the ancient Greeks. The younger sons would certainly be delighted. True, then they would have lived in the vicinity of Athens, Sparta or Corinth, and not covered the entire Mediterranean with their colonies. Or, conversely, they would cover the whole ecumene.

3. In ancient Rome

In the ancient world, mortgages were known in Babylon (the laws of Hammurabi in the 6th century BC), Mesopotamia, even India (in the 2nd century BC). But mortgage became closest to modern conditions in ancient Rome.

At first, the debt relations among the Romans were built, so to speak, on parole, in the form of a "transaction on trust" (lat. Fiducia), and the risks were taken not by the creditor, but by the debtor: in exchange for money, using a special legal procedure, he transferred to the creditor pledge, that is, movable or immovable property. After paying off the debt, he could only hope that the creditor would keep his promise and, with the help of a mirrored legal procedure, return the collateral. If the creditor for some reason refused to do this, the debtor could only defame his name among fellow citizens - the law could not help him in any way, a deal is a deal.

Already by the II century BC, mortgage relations had developed significantly. Under the new form of a pledge transaction (lat. Pignus), the creditor, in exchange for his money, no longer received the title to the debtor's property, but only the right to own this property. The creditor did not even have the right to use this property, but the fruits acquired from this property could go to pay the debt or interest on it. Only in the case when the debtor could not pay in accordance with the obligations undertaken, the creditor became the owner of his property.

Finally, in the first decades of the II century BC, a third type of collateral appears, which is really close to modern mortgages (lat. Hypotheca legalis) - a pledge of property without transferring it to the creditor.

This was facilitated by the change in the political and economic conditions of that time: the weakening of the slave system and the massive transfer of land to tenants. Initially, tenants - apartments or small plots - pledged their movable property (for example, furniture or agricultural tools) as security for rent, but continued to own it. Subsequently, real estate could also become an object of mortgage.

If the borrower could not pay according to the agreement, the lender received the right to claim the pledged item with its subsequent sale at auction and compensation from the proceeds of the borrower's debt balance.

If there was a modern mortgage:the Roman mortgage was already quite developed, but it had a number of disadvantages. For example, in ancient Rome, a unified register of property was not kept, and the lender, accepting a pledge, could not be sure that the same property was no longer pledged to another lender and that in the event of the borrower's bankruptcy, his mortgage right would not collide with someone else's mortgage right.

In addition, the mortgage was usually extended to the entire property of the borrower, which made its volume and value uncertain, which could change over time. This unsettled property relations hampered the development of mortgages, which meant that Roman citizens who needed it suffered.

4. In medieval Europe

As can be seen from the above, a mortgage is able to exist normally only with strict observance of the rights of participants in transactions. Structurally complex transactions required control and regulation, and in the long term - a well-functioning registration system. All this could only be provided by the state. Therefore, along with the fall of the Roman Empire as a single centralized state formation in the 5th-6th centuries AD, the institution of mortgage practically ceased to exist.

It was revived only in the era of the High Middle Ages (XII-XIII centuries), on a new wave of development of monetary and legal relations. Feudal lords often needed money to wage internecine wars or crusades, and therefore they were forced to mortgage their castles and ancestral lands to usurers or wealthier neighbors.

As a result, Western Europe, as the successor to the Roman Empire, adopted and developed the institution of mortgage, making it even more formalized, protected by developed legislation. In addition, there were special mortgage books, where information about the mortgaged real estate was entered.

In the era of the Late Middle Ages (XIV-XVI centuries), the mortgage was finally established in the form in which it exists to this day: the mortgaged property remains in the possession of the debtor, and the creditor receives the right, in the event of non-repayment of the debt, to reclaim the mortgaged property with its subsequent sale at auction …

If there was a modern mortgage:it is good if you are a large feudal lord and you have something to mortgage - and hope for booty of war, which will reimburse both debt and interest. But the overwhelming majority of Western Europeans in the Middle Ages were poor peasants who owned too small plots to count on large loans. And in general, courts, lawsuits, notaries and lawyers are for the rich and noble, at best - for the burghers of large cities. No, mortgages in the Middle Ages were still far from generally available.

5. Modernity

In the 19th century, industrial growth, urbanization and the development of urban infrastructure contributed to the explosive growth of the mortgage market. In the most developed European countries - England, France or the Netherlands - the principles of lending to finance construction were used actively and everywhere. The money supply in construction and industry was also invested in other European countries, including the Russian Empire.

In the twentieth century, mortgage acquired a special role in the United States during the Great Depression. It was she who formed the basis of Franklin Roosevelt's "New Deal".

In the American housing market, there are two types of loans - construction loans and mortgages. The loan amount does not exceed 80–90 percent of the value of the mortgaged real estate. The size of the first installment made by the borrower from his own funds, respectively, is 10-20 percent. The state provides the poor with concessional loans for the full value of the house.

Today, mortgage loans in the United States are issued for a period of 15–20 years. A distinctive feature of the American mortgage is the targeted and systematic government support for mortgage lending through instruments such as the secondary mortgage market, government loan insurance, and benefits in obtaining loans for low-income citizens. Thanks to these measures and the availability of credit, 75 percent of Americans have their own home.

In Russia, the mortgage market began to develop only after the collapse of the USSR. In 1997, the government established the Residential Mortgage Lending Agency to attract investment in the mortgage sector. In 1998, the law "On mortgages (pledges of real estate)" was adopted. According to the data on mortgage loans granted to individuals-residents and the acquired rights of claim for mortgage loans in rubles of the Central Bank, the growth of mortgage lending in 2017 compared to the year before last was 37 percent. In total, in 2017, loans were issued in the amount of more than two trillion rubles. This became possible due to the consistent decrease in the key rate. In December 2017, it was fixed. The Bank of Russia decided to keep the key rate at the level of 7.25% per annum at the level of 7.25% per annum.

The general trend of modern mortgage is obvious - it will be more and more affordable for an increasing number of citizens. The goal of the states that support this type of lending is to provide their own housing for the maximum number of their citizens and young families.