The History of a "Dead Pledge"

Home secured loans known as mortgages are a part of our lives, we hear, read and talk about them nearly everyday. You would probably be surprised to find how far back the history of home loans goes. Existence and popularity of mortgages is so obvious that we don’t even think about their origins. It doesn't matter how many years old this practice is, the idea has never changed - value of properties was always high and most people couldn't afford buying them like other goods, with cash. Hence the only way to become property owner is to borrow money. This is how that business started as far back as in 1190 in England. Common English law included a rule intended to protect a lender by giving him an interest in his borrower’s property. Following this rule, the mortgage was a conditional sale. Albeit the lender held title to the property, the borrower could, in the event the debt wasn’t paid, sell the property to get his money back. The origins of the “mortgage” term are quite interesting.

The word “mortgage” is an old French word being a result of merging two Latin words. “Mort” which means death and “gage” means a pledge to forfeit something of value if a debt is not repaid. Literally mortgage is a "dead pledge". It was "dead" for two reasons, the property was forfeit or "dead" to the borrower if he didn't repay the loan, and the pledge itself was "dead" if the loan was repaid. The Great Jurist Sir Edward Coke (1552-1634) explained the meaning of “mortgage”:

Originally, ownership rights extended from the center of the earth to the sky. Obviously, now they are generally limited to surface rights only.

European Pioneers moved to settle in America and they brought their systems with them. With an increase of land ownership increased the need for loans. Mortgages were already widespread and readily attainable in the early 1900s. Anyway, mortgages weren't easily accessible for everyone. In those days, buyers going to buy property were usually expected to pay a 50% down payment on a 5-year mortgage. In other words buying a house worth $10,000 the borrower had to save $5,000 before getting a mortgage and pay interest for 5 years. At the end of 5 years period, the unpaid (and unchanged) balance of $5,000 would have to be either paid or refinanced.

There are no much information about the past of Irish mortgages. However, you can see the amount of money floating around on the mortgage market today. That's why the lending business is so important - for everyone, lenders and borrowers. The credit bureaus monitor your credit report; you monitor the information the credit bureau has on you. Credit monitoring ties in very closely with the history of home mortgages. The home loans industry is constantly changing, constantly looking for ways to expand home ownership among potential customers with lower-income.