A Micro View On Home Equity Withdrawal And Its Determinants. Evidence From Dutch Households
Home equity is the most important part of a household portfolio, but only recently has it become more accessible through innovations in the mortgage market and financial deregulation. This paper looks at the factors driving home equity withdrawal on a household level using Dutch survey data and assesses to which degree different theoretical predictions can be empirically supported. There is little evidence that equity withdrawal is used as a buffer against adverse income shocks, with financial motives and life-cycle effects likely to dominate a household's decision. Finally, the paper provides first evidence of the impact of changing supply side conditions on home equity withdrawal.