Written by: Emily Karklin
How it All Started
Today, with rising inflation rates, many people cringe at the thought of buying a new house. New generations they don’t get to think about the good old days of being able to pay off mortgages and being able to throw mortgage burning parties. Mortgages have been around for many centuries and if you are able to pay it off, that should be celebrated.
We can thank England for making mortgages popular. When someone did not have enough money to purchase land all at once they could get loans from the seller. Payments were made directly to whoever was selling and if you fell behind on payments you lost the right to the land and all the payments you had previously made.
Before the Great Depression mortgages were short term and were kept short because of large down payments that were greater than 20%. The mortgages were so short that they would only last for around 5 to 10 years. Because mortgages had a short payback term people would prioritize paying them off. After paying them off it was time to throw mortgage burning parties.
No more mortgages meant people would be able to save or spend money on what they wanted. To kick off the party, a copy of the mortgage was burned to which symbolized their newly found freedom. Friends and family were usually invited and would bring gifts for the party host. Once paid off it was uncommon for the family or individual living in that house to move.
Post-War Home Buying
Due to World War II and the Great Depression, lots of people were unable to make loan payments. This is what led to the 25 year mortgage. In 1946, the Canadian Mortgage and Housing Corporation and the National Housing Act were created. Today they sell mandatory mortgage loan insurance in case individuals are putting less than 20% down on a house.
In addition, interest rates skyrocketed alongside inflation in the 1970s. Partially amortized mortgages were created to protect lenders and borrowers. People began taking out 20 to 30 year loans. In Selkirk, our very own curling club held a mortgage burning party on November 16, 1974. The celebration was held in its banquet hall. The ownership was turned over to the Town of Selkirk and a long-term lease agreement was signed for an astonishing $1 per year.
Mortgages have evolved a lot since the early 1900s. From being able to pay them off in 5 to 10 years to now being able to take out lifetime loans, let’s hope that we will be able to throw mortgage burning parties once again. As Benjamin Franklin once said, “If you would know the value of money, go and try to borrow some.”
To read about the Selkirk Curling Club click HERE
For more about mortgage burning parties click the links below