AMEL Seminar, Lisa Dettling, Federal Reserve Board

Speaker

Lisa Dettling, Federal Reserve Board

Title

"Did the Modern Mortgage Set the Stage for the U.S. Baby Boom?"

Abstract

This paper proposes that the adoption of the modern US mortgage characterized by low down payments, long terms, and fixed rates—led by the Federal Housing Administration (FHA) and Veteran’s Administration (VA) loan insurance programs, set the stage for the mid-twentieth century US baby boom by significantly increasing homeownership rates among young families. Using newly digitized data on FHA- and VA-backed loan issuance and births by state-year, along with a novel instrumental variables strategy to isolate supply-side variation in loan issuance, the study finds that these mortgage insurance programs contributed to 3 million additional births from 1935 to 1957, accounting for roughly 10 percent of the excess births during the baby boom. However, aggregate effects mask disparities, as no impact was found on births for Black women, reflecting well-documented racial discrimination in these lending programs. These findings underscore the critical role of access to homeownership in shaping fertility decisions.