The “Home ATM” Mostly Closed in Q3

Today, in the Real Estate Newsletter: The “Home ATM” Mostly Closed in Q3


During the housing bubble, many homeowners borrowed heavily against their perceived home equity – jokingly calling it the “Home ATM” – and this contributed to the subsequent housing bust, since so many homeowners had negative equity in their homes when house prices declined. Note: Very few homeowners have negative equity now – unlike during the housing bubble.

Mortgage Equity WithdrawalHere 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.

In Q3 2023, mortgage debt increased $85 billion, down from $92 billion in Q2, and down from the cycle peak of $467 billion in Q2 2021. 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).

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