Various policies, including subsidies, regulations and taxes, are geared toward raising US homeownership levels by giving more borrowers access to mortgages and at lower interest rates than available in the private-label mortgage market. In particular, the 1992 GSE Act, which required the GSEs to increase purchases of mortgages originated by low-income borrowers, was a milestone in US housing policy, seeking to promote homeownership among underrepresented and underserved groups.
Affordability targets were introduced, requiring 30% of the loans bought by Fannie Mae and Freddie Mac to be made to people at or below the median income in the communities where they lived. These targets steadily increased, reaching 56% in 2008, but have fallen back since the financial crisis, to 24% in 2015.
Some argue that the current structure of housing finance in the US does little more than encourage better-off households to purchase larger and more expensive houses. Our analysis indicates that this may be too simplistic an interpretation. Instead, we focus on US-specific structural inequalities and suggest that government intervention has enabled the US to achieve levels of homeownership comparable to other developed countries, despite higher (and rising) levels of income inequality.