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Who Withdraws Housing Equity and Why?



The decision to extract home equity is examined using household-level data for the UK over 1993–2003. At its peak during the period, around 1-in-10 homeowners withdraw equity per year. Little is known about this financial decision. I find that the equity withdrawal decision conforms to predictions from the standard life-cycle framework and models that predict its use as a financial buffer. The paper also estimates responses to the large house price appreciation and significant reductions in mortgage rates seen during the period.