Is Housing Wealth an 'ATM'? The Relationship Between Household Wealth, Home Equity Withdrawal, and Saving Rates

Is Housing Wealth an 'ATM'? The Relationship Between Household Wealth, Home Equity Withdrawal, and Saving Rates

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This paper examines the role increasing personal wealth and home equity withdrawal (HEW) have had in the decline in the personal saving rate in the United States. It does so by comparing the U.S. experience with those of Australia, Canada, and the United Kingdom. Mortgage market liberalization and innovation should reduce household cash flow and collateral constraints while making housing wealth more liquid as HEW becomes easier over time. Regression analysis indicates the expected negative relationship between U.S. saving and net worth, with a somewhat smaller coefficient than in previous studies. HEW is estimated to have a temporary negative impact on saving of the order of 20 cents on the dollar.Krainer and Marquis (2003) attribute the far higher rate of U.S. mortgage refinancing in 2001a€“02 compared to ... Lower transactions costs also increase the a#39;churna#39; rate on house purchases, providing opportunities to extract equity. ... driven by the dramatic growth in the issuance of securitized pools of home equity loans (HELs) and lines of credit (HELOCs), thus ... Ratio of Unsecured Credit to Total Household Debt 10 15 20 25 30 35 40 45 10 15 20 25 30 35 40 45 Australia Canadaanbsp;...


Title:Is Housing Wealth an 'ATM'? The Relationship Between Household Wealth, Home Equity Withdrawal, and Saving Rates
Author: Vladimir Klyuev, Paul S. Mills
Publisher:International Monetary Fund - 2006-06-01
ISBN-13:

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