Mortgage Equity Withdrawal

AAA

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.

INVESTOPEDIA EXPLAINS '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

    A debt instrument, secured by the collateral of specified real ...
  2. Equity Stripping

    The process of reducing the overall equity in a property in order ...
  3. Home Equity Line Of Credit - HELOC

    A line of credit extended to a homeowner that uses the borrower's ...
  4. Home-Equity Loan

    A consumer loan secured by a second mortgage, allowing home owners ...
  5. Gross Domestic Product - GDP

    The monetary value of all the finished goods and services produced ...
  6. Cash-Out Refinance

    A mortgage refinancing transaction in which the new mortgage ...
Related Articles
  1. Economics

    Economics Basics

    Learn economics principles such as the relationship of supply and demand, elasticity, utility, and more!
  2. Credit & Loans

    How Mortgage Refinancing Affects Your Net Worth

    Find out how to determine whether refinancing will put you ahead or even more behind.
  3. Economics

    Understanding Supply-Side Economics

    Does the amount of goods and services produced set the pace for economic growth? Here are the arguments.
  4. Economics

    How Interest Rates Affect The Housing Market

    Understand how rate changes can affect home prices, and learn how you can keep up.
  5. Options & Futures

    Make A Risk-Based Mortgage Decision

    Find out how to choose which mortgage style is right for you.
  6. Retirement

    Mortgage Asset-Liability Management Made Easy

    Should you refinance your mortgage to purchase other assets? Learn how to weigh your risk.
  7. Retirement

    Economic Indicators To Know

    The economy has a large impact on the market. Learn how to interpret the most important reports.
  8. Credit & Loans

    What are the pros and cons of owning an equity REIT versus a mortgage REIT?

    Learn about investing in equity, mortgage and hybrid REITs. Explore the different strategies REITs employ to generate income and create dividends.
  9. Credit & Loans

    What is the debt ratio for an FHA loan?

    Borrowing through the Federal Housing Administration requires individuals to provide proof of income as well as information relating to total outstanding debt.
  10. Home & Auto

    What factors should I consider when shopping for the best mortgage lender?

    Comparing lenders to obtain the best mortgage loan requires research and willingness to shop around for the best loan to fit individual needs.

You May Also Like

Hot Definitions
  1. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  2. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  3. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  4. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  5. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
  6. Key Performance Indicators - KPI

    A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their ...
Trading Center