Working Paper: Housing as collateral and home-equity extraction

Working Paper - February 2019 - No. 135

Authors Hviid, Simon Juul; De Stefani, Alessia
Subject household balance sheets; Housing finance
Type Working paper
Year 2019
Published 20 February 2019
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.