The bottom line

…off the top of my head, I cannot come up with any reason to
subsidize mortgage indebtedness. How does your having a mortgage loan
benefit me? Does anyone have an answer for that? Bueller?

I think that mortgage subsidies emerged pretty much by accident. The
income tax deductibility began when hardly anyone paid income tax, and
it has been grandfathered in ever since. In the 1930’s, government
decided to reshape the mortgage market, and that effort evolved into
government agencies, such as Fannie Mae, FHA, and Freddie Mac. Fannie
and Freddie were subsequently spun out to private shareholders as
government-sponsored enterprises, but Congress never let the GSE’s
forget that they had a "mission" to provide subsidies to low-income

That’s Arnold Kling.  I’ll add two complementary points.  First, higher investment in homes may bring negative externalities through climate change.  Second, home ownership apparently makes a laborer less geographically mobile and increases the severity of business cycles and real shocks.


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