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Thursday, March 09, 2023

"Home ATM" is Closing; Mortgage Equity Withdrawal (MEW) Declines in Q4

by Calculated Risk on 3/09/2023 02:29:00 PM

Today, in the Real Estate Newsletter: "Home ATM" is Closing


Here is the quarterly increase in mortgage debt from the Federal Reserve’s Financial Accounts of the United States - Z.1 (sometimes called the Flow of Funds report) released today. In the mid ‘00s, there was a large increase in mortgage debt associated with the housing bubble.

Mortgage Equity WithdrawalIn Q4 2022, mortgage debt increased $155 billion, down from $210 billion in Q3, and down from the cycle peak of $258 billion in Q2 2022. Note the almost 7 years of declining mortgage debt as distressed sales (foreclosures and short sales) wiped out a significant amount of debt.

However, some of this debt is being used to increase the housing stock (purchase new homes), so this isn’t all Mortgage Equity Withdrawal (MEW).
The bottom line is, the “Home ATM” is now closing with refinance activity off sharply and HELOC borrowing declining.
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