Municipal Bonds in the Housing Market
The first large municipal bond issue to raise money for residential mortgages was offered in Chicago in July 1978. The program, a $100 million issue to finance low and moderate income families in the purchase of single family homes, was successful from its inception. Under this first offering, 2,100 Chicago families received home mortgage loans at an interest rate of 7.99 percent—about 2 percentage points less than the going rate on conventional mortgages. The next March, the city issued another $150 million of these tax-exempt obligations.