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

27 Pages Posted: 26 Jul 2006

See all articles by Vladimir Klyuev

Vladimir Klyuev

International Monetary Fund (IMF)

Paul S. Mills

affiliation not provided to SSRN

Date Written: June 2006

Abstract

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.

Keywords: Household Saving, Home Equity Withdrawal, Housing Finance

JEL Classification: E21, G21

Suggested Citation

Klyuev, Vladimir and Mills, Paul S, Is Housing Wealth an 'ATM'?: The Relationship between Household Wealth, Home Equity Withdrawal, and Saving Rates (June 2006). IMF Working Paper No. 06/162, Available at SSRN: https://ssrn.com/abstract=920254

Vladimir Klyuev (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Paul S Mills

affiliation not provided to SSRN

No Address Available

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