Working Papers present research work by both Danmarks Nationalbank’s employees and our partners. Working Papers are primarily targeted at professionals and people with an interest in central banking research as well as economics and finance in a broader sense.
Working Paper: Housing as collateral and home-equity extraction
We study the effect of house price developments on home-equity extraction and household expenditure, exploiting data covering the population of Danish homeowners between 2009 and 2016. Our findings indicate that house price increases affect home-equity extraction – and more so for homeowners close to their borrowing limits. Furthermore, the effect of house prices on expenditure is entirely driven by home-equity extraction. Our results indicate that the mortgage system plays an important role for the transmission of housing wealth increases to the real economy.