Motivations for Equity Borrowing: A Welfare-switching Effect
During the early 2000s, mortgage market innovation together with home price appreciation increased the scope for mortgage equity withdrawal. From a macroeconomic perspective, this proved to be an important transmission mechanism for the wealth (particularly collateral) effects of housing. Microecono...
| Main Authors: | , , , |
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| Format: | Journal Article |
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Hindawi Publishing Corporation
2013
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| Online Access: | http://hdl.handle.net/20.500.11937/32526 |
| _version_ | 1848753687917232128 |
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| author | Wood, Gavin Parkinson, S. Searle, B. Smith, S. |
| author_facet | Wood, Gavin Parkinson, S. Searle, B. Smith, S. |
| author_sort | Wood, Gavin |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | During the early 2000s, mortgage market innovation together with home price appreciation increased the scope for mortgage equity withdrawal. From a macroeconomic perspective, this proved to be an important transmission mechanism for the wealth (particularly collateral) effects of housing. Microeconomic accounts of equity borrowing are less well developed, since standard models of savings and consumption rarely take housing wealth into account. This paper, however, builds on a small but growing literature assigning a precautionary savings role to consumption from housing wealth. The analysis uses panel data sourced from Britain and Australia to model households’ motivations for equity borrowing. Key among these motivations are pressing, uninsurable, ostensibly short-term, spending needs. In these contexts, it is proposed that equity borrowing assumes a welfare-switching role, substituting privately owned housing wealth for collectively funded safety-nets. |
| first_indexed | 2025-11-14T08:28:29Z |
| format | Journal Article |
| id | curtin-20.500.11937-32526 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T08:28:29Z |
| publishDate | 2013 |
| publisher | Hindawi Publishing Corporation |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-325262018-03-29T09:08:13Z Motivations for Equity Borrowing: A Welfare-switching Effect Wood, Gavin Parkinson, S. Searle, B. Smith, S. During the early 2000s, mortgage market innovation together with home price appreciation increased the scope for mortgage equity withdrawal. From a macroeconomic perspective, this proved to be an important transmission mechanism for the wealth (particularly collateral) effects of housing. Microeconomic accounts of equity borrowing are less well developed, since standard models of savings and consumption rarely take housing wealth into account. This paper, however, builds on a small but growing literature assigning a precautionary savings role to consumption from housing wealth. The analysis uses panel data sourced from Britain and Australia to model households’ motivations for equity borrowing. Key among these motivations are pressing, uninsurable, ostensibly short-term, spending needs. In these contexts, it is proposed that equity borrowing assumes a welfare-switching role, substituting privately owned housing wealth for collectively funded safety-nets. 2013 Journal Article http://hdl.handle.net/20.500.11937/32526 10.1177/0042098013477706 Hindawi Publishing Corporation restricted |
| spellingShingle | Wood, Gavin Parkinson, S. Searle, B. Smith, S. Motivations for Equity Borrowing: A Welfare-switching Effect |
| title | Motivations for Equity Borrowing: A Welfare-switching Effect |
| title_full | Motivations for Equity Borrowing: A Welfare-switching Effect |
| title_fullStr | Motivations for Equity Borrowing: A Welfare-switching Effect |
| title_full_unstemmed | Motivations for Equity Borrowing: A Welfare-switching Effect |
| title_short | Motivations for Equity Borrowing: A Welfare-switching Effect |
| title_sort | motivations for equity borrowing: a welfare-switching effect |
| url | http://hdl.handle.net/20.500.11937/32526 |