Mortgage Finance Expert, Edward Ingram, May Have A Solution To Global Economic Instability

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( — June 6, 2013) PRETORIA, South Africa — Edward Ingram, a long time expert in Mortgage Finance, after years of research, has produced a position paper concluding that Mortgage Finance as currently practiced remains at the heart of Global Economic Instability.

Ingram proposes replacing the current Mortgage Model with one that has similarities to rental payments. This new ILS Model has several advantages over the current unbalanced model.

An older version of the Ingram model has been used in Turkey. That mortgage model was revisited in the 1980s at Number 10 Downing Street. Ingram was invited there to compare notes. The equations were identical. At the time, he was not entirely happy with that simple model, but he has addressed the weaknesses in it. Now he has the backing of some top bankers and actuaries.

Ingram’s new Mortgage Model has three versions:

  1. Defined Cost Model – the rate at which payments reduce compared to average incomes is fixed in advance.
  2. Hybrid Model – the mortgage begins normally but a rescue option converts it to the safer ILS Model if interest rates rise too high. This can be used in economic recovery mode.
  3. Adjustable Rate Model – the rate at which payments fall relative to incomes is variable.  

Traditional Fixed Interest Mortgages can be a problem, costing more interest, and not reducing payments if incomes are not rising. This is a significant problem in some austerity economies.

“No matter which model is used, the new model or the current models, the amount that can be SAFELY loaned is always the about same. With ILS, this figure varies much less over a business cycle than the traditional mortgage model that creates pricing bubbles and vulnerability in both price and arrears. This is good news for the construction industry and for people who use their homes as an asset in their retirement planning or as collateral for business loans. It is also very good news for an economy,” Ingram says. “Careful application can safeguard the economic recovery without dropping property prices or creating significant arrears as interest rates rise.”

Ingram’s research goes far beyond mortgage finance to uncover numerous other sources of economic fragility that also need to be addressed. He lists these in a Research abstract in his Macro-economic Design Blog.

With a growing body of professional economists, bankers, actuaries and professors showing heightened interested in this model, the next step is to gain the attention of economic luminaries such as Paul Singer, Niall Ferguson, Gary Schilling, Bill Gross, Paul Krugman or David Stockman, to review the ideas.


Edward C D Ingram –

Tel: +27125475816 Cell +27749660660


Graham Hollick, a Past President of the International Union for Housing Finance

Andrew Pampallis, Retired Senior Lecturer in Banking at the University of Johannesburg

Professor Daniel Makina, Professor of Finance and Risk Management at the University of South Africa, author of a paper on the state of Mortgage Finance in Africa