Fannie Mae Foundation

Housing finance traditionally has been an area of intervention by governments, especially through the creation of special circuits for funding flows. This paper analyzes these special circuits in five developed countries (Denmark, France, Germany, United Kingdom, and the United States) and tracks their evolution through the 1980s under the pressures of inflation, interest-rate volatility, deregulation, and integration of international financial markets. Political and market forces seem to have eroded both the reasons for having special circuits and the ability to maintain them. All of the subject countries experienced some degree of decline in these circuits and moved toward integration of housing finance within competitive, market-driven financial systems. This trend will probably continue in the 1990s.