Government-guaranteed home mortgages, especially when a negligible down payment or no down payment whatever is required, inevitably mean more bad loans than otherwise.
They force the general taxpayer to subsidize the bad risks and to defray the losses. They encourage people to buy houses that they cannot really afford. They tend eventually to bring about an over-supply of houses. They temporarily over stimulate building, raise the cost of building for everybody. May mislead the building industry into an eventually over expansion.
In brief, in the long run they do not increase overall national production but encourage malinvestment. —Henry Hazlitt
Government-guaranteed home mortgages, especially when a negligible down payment or no down payment whatever is required, inevitably mean more bad loans than otherwise. They force the general taxpayer to subsidize the bad risks and to defray the losses. They encourage people to buy houses that they cannot really afford. They tend eventually to bring about an over-supply of houses. They temporarily over stimulate building, raise the cost of building for everybody. May mislead the building industry into an eventually over expansion. In brief, in the long run they do not increase overall national production but encourage malinvestment. —Henry Hazlitt
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