In most developed countries mortgages make up the bulk of household debt, tying the fate of the financial system to that of the housing market, but policy-makers can be reticent when it comes to trying out innovative design ideas.

Efforts to improve the stability of the mortgage market often focus on shoring up banks' capital or limiting lending to riskier households. By contrast, a conference at the Federal Reserve Bank of New York in May this year pointed to the possibility of targeting the