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Analysis of Housing Equity Withdrawal by its Forms

Author

Listed:
  • Declan French
  • Donal McKillop
  • Tripti Sharma

Abstract

Using the household level data from the UK Wealth and Asset Survey for years 2006-2014, we explore a household’s decision to use one particular method of withdrawing home equity from a range of options available to them. These options include financial products such as remortgage contracts and equity release schemes (reverse mortgage and home reversion schemes) and informal mediums carried out by individual households themselves, for example downsizing of homeownership. The results show that homeowners prefer using formal channels of equity withdrawal. This tendency persists when controlling for household characteristics such as age profile, marital status and demographics and levels of housing wealth, income, savings and unsecured and secured debts. Our findings support the argument that while the decision to withdraw home equity conforms to consumption smoothing motives, the choice of an equity withdrawal medium goes beyond those motives and depends on the circumstances facing individual households.

Suggested Citation

  • Declan French & Donal McKillop & Tripti Sharma, 2017. "Analysis of Housing Equity Withdrawal by its Forms," CHaRMS Working Papers 17-04, Centre for HeAlth Research at the Management School (CHaRMS).
  • Handle: RePEc:qub:charms:1704
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    References listed on IDEAS

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    Cited by:

    1. Bravo, Jorge Miguel & Ayuso, Mercedes & Holzmann, Robert, 2019. "Making Use of Home Equity: The Potential of Housing Wealth to Enhance Retirement Security," IZA Discussion Papers 12656, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Equity release schemes; Reverse mortgage; Refinancing; Downsizing; Housing; Homeownership; Retirement; Wealth de-accumulation;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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