DEFINITION of 'Mortgage Equity Withdrawal'

The amount of equity that consumers withdraw from their homes through home equity loans or lines of credit and cash-out refinances. Mortgage equity withdrawal is a relevant variable in the prediction of consumer spending and, therefore, gross domestic product (GDP). This statistic is often expressed as a percentage.

BREAKING DOWN 'Mortgage Equity Withdrawal'

Mortgage equity withdrawal is cyclical, and varies based on rising home prices and, to some degree, the overall level of interest rates. An interesting feature of mortgage equity withdrawal in applying it to economic forecasting is calculating what percentage of the total equity withdrawal goes directly into consumer spending and what percentage is used to pay down existing consumer debt. Mortgage lenders market loans heavily to consumers for both reasons. Another interesting feature of mortgage equity withdrawal in applying it to economic forecasting is that consumers do not generally spend all of their withdrawals at one time.

RELATED TERMS
  1. Mortgage Equity Withdrawal - MEW

    The removal of equity from the value of a home through the use ...
  2. Purchase Mortgage Market

    A mortgage market for home financing transactions. The primary ...
  3. Withdrawal

    Removing funds from an account, plan, pension or trust. In some ...
  4. Reverse Mortgage

    A type of mortgage in which a homeowner can borrow money against ...
  5. Mortgage Rate

    The rate of interest charged on a mortgage. Mortgage rates are ...
  6. No Cash-Out Refinance

    The refinancing of an existing mortgage for an amount equal to ...
Related Articles
  1. Personal Finance

    The Smartest Way to Tap Your Home Equity

    Using your home as a source of funds can be a smart choice in some situations. Just be sure to run the numbers carefully.
  2. Personal Finance

    Home Mortgage

    A home mortgage is a loan given by a bank, mortgage company or other financial institution for the purchase of a primary or investment residence.
  3. Personal Finance

    Reverse Mortgage Pros and Cons

    It's a way to use your home equity for help when you're older. But does it make sense for your family? Here's how to tell and how to protect your spouse.
  4. Personal Finance

    Reduce Interest With An All-In-One Mortgage

    "Offset" mortgages combine a checking account, home-equity loan and mortgage into one account.
  5. Financial Advisor

    The 4% Withdrawal Rule: One Size Fits All?

    The 4% rule for retirement withdrawals has been a staple in financial planning for over 20 years, but no rule of thumb or approach is one size fits all.
  6. Personal Finance

    Mortgage Company

    A company engaged in the business of originating and/or funding mortgages for residential or commercial property.
  7. Personal Finance

    Should You Cash Out When You Refinance?

    If you want to cash out, make sure you’re doing it for the right reasons.
  8. Investing

    The Most Important Factors that Affect Mortgage Rates

    Discover what the most important factors are that affect mortgage interest rates. Factors range from inflation and economic growth to Federal Reserve activity, .
  9. Personal Finance

    The Rules for Getting an FHA Reverse Mortgage

    A reverse mortgage can make it affordable for you to live in your home for the rest of your life. But make sure you know the rules first.
  10. Retirement

    Steps To Retiring With A Reverse Mortgage

    Follow this simple six-step guide to investigating a reverse mortgage. And be sure to compare it to other ways home equity can help fund your retirement.
RELATED FAQS
  1. How do you withdraw money from your 401(k)?

    Deciding to take a withdraw from your 401k is not a decision that should be made lightly. However, for those who needs funds, ... Read Answer >>
Trading Center