Why were life insurance companies historically significant in mortgage financing?

Life insurance companies played a historically significant role in mortgage financing primarily due to their substantial assets and their ability to leverage these assets without immediate liquidity concerns. This capacity allowed them to provide long-term funding for mortgages, unlike other financial institutions that might have been more sensitive to liquidity needs. Life insurers could invest their premiums into various long-term financial commitments, such as mortgages, which aligned well with their obligations to policyholders, who often had long-term needs.

Due to the nature of their business model, life insurance companies could take on the relatively stable yet lower-return investments typical of mortgage lending, thus playing an essential role in the development of the mortgage market. Their ability to commit large sums over extended periods made them a critical source of capital for homebuyers and facilitated the growth of the housing finance sector overall.