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Who Withdraws Housing Equity and Why?

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  • ANDREW BENITO

Abstract

The decision to extract home equity is examined using household-level data for the UK over 1993-2003. At its peak during the period, around 1-in-10 homeowners withdraw equity per year. Little is known about this financial decision. I find that the equity withdrawal decision conforms to predictions from the standard life-cycle framework and models that predict its use as a financial buffer. The paper also estimates responses to the large house price appreciation and significant reductions in mortgage rates seen during the period. Copyright (c) The London School of Economics and Political Science 2008.

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Bibliographic Info

Article provided by London School of Economics and Political Science in its journal Economica.

Volume (Year): 76 (2009)
Issue (Month): 301 (02)
Pages: 51-70

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Handle: RePEc:bla:econom:v:76:y:2009:i:301:p:51-70

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Cited by:
  1. Viola Angelini & Peter Simmons, . "Housing Debt and Consumption," Discussion Papers 11/20, Department of Economics, University of York.
  2. Ebner, André, 2010. "A micro view on home equity withdrawal and its determinants. Evidence from Dutch households," Discussion Papers in Economics 11309, University of Munich, Department of Economics.
  3. John Gathergood, . "Debt and Depression: Evidence on Casual Links and Social Stigma Effects," Discussion Papers 11/10, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
  4. Dag Einar Sommervoll & Gavin Wood, 2011. "Flips, flops and foreclosures: anatomy of a real estate bubble," Journal of Financial Economic Policy, Emerald Group Publishing, vol. 3(1), pages 66-85, February.
  5. John V. Duca & Anil Kumar, 2011. "Financial literacy and mortgage equity withdrawals," Working Papers 1110, Federal Reserve Bank of Dallas.
  6. Benito, Andrew & Saleheen, Jumana, 2012. "Labour Supply as a Buffer: Evidence from UK Households," IZA Discussion Papers 6506, Institute for the Study of Labor (IZA).
  7. Lydon, Reamonn & O'Hanlon, Niall, 2012. "Housing Equity Withdrawal, Property Bubbles and Consumption," Research Technical Papers 05/RT/12, Central Bank of Ireland.
  8. Weber, Jeremy G. & Key, Nigel, 2013. "Does proprietor wealth influence small business decisions? Land appreciation and farm business borrowing, land ownership, and output," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150408, Agricultural and Applied Economics Association.

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