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Thursday, June 08, 2023

The "Home ATM" was Closed in Q1; Mortgage Equity Withdrawal (MEW) turns negative in Q1 2023

by Calculated Risk on 6/08/2023 01:26:00 PM

Today, in the Real Estate Newsletter: The "Home ATM" was Closed in Q1


For Q1 2023, the Net Equity Extraction was minus $30 billion, or -0.60% of Disposable Personal Income (DPI).   This is down significantly year-over-year and the first negative reading since Q1 2020. There is a seasonal pattern to MEW, and Q1 is usually the weakest quarter, so it is possible we will see positive MEW this summer.

Mortgage Equity WithdrawalDuring the housing bubble we saw several quarters with MEW above 8% of DPI - that didn’t happen this cycle.

This graph shows the net equity extraction, or mortgage equity withdrawal (MEW), results, using the Flow of Funds (and BEA data) compared to the Kennedy-Greenspan method. MEW was negative for a number of years but has picked up again following the onset of the pandemic.

The bottom line is, the “Home ATM” was closed in Q1 with both refinance activity and HELOC borrowing off sharply.
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