Negative Mortgage Equity Withdrawal

Readers Question: During 1995 – 1997 in the UK, mortgage equity withdrawal was negative. What does a negative mew value show? and why was there a negative value during this period in the UK?

Mortgage equity withdrawal occurs when people borrow money against the value of their house.

A common way to withdraw equity is to re-mortgage your house. This is especially common when house prices are rising because the house is worth more than the initial mortgage. Mortgage equity withdrawal is thus a way to increase borrowing secured against your rising house value.

Net Mortgage Equity Withdrawal is a way to measure the total amount that people borrow against their house, but, don’t use to invest in housing. i.e. people re-mortgaging to buy a car e.t.c

However, in addition to withdrawing your equity through re-mortgaging. Consumers also inject money through buying houses and improving the condition of existing houses.

A negative value of MEW means that the value of housing stock is increasing faster than the amount of equity taken out by homeowners.

In 1995, we see the following statistics:

(A) Withdrawal by Mortgages £ million 11,519
(B) Other Equity Withdrawals £ million 17,434

(C) Equity Injected through House Purchase £ million 11,721
(D) Financial Equity Injected £ million 13,045
(E) Dwelling Improvement Investment £ million 10,573

(F) Net Equity Withdrawal £ million -6,386
Source Council of Mortgage Lenders CML pdf

Another way to define net equity withdrawal is to compare the increase in the value of the housing stock (excluding revaluations, of course) with the increase in debt secured on it.

Basically, in the period of 1995-98, the value of housing stock was increasing faster than the value of debt secured.

However, in 2000, equity withdrawal was over £63,000 million (£32,000 m through mortgage equity withdrawal) but the value of housing stock increased by only £55) Therefore in that year net equity withdrawal was positive

Why Negative Period of Equity Withdrawal?

Two of the reasons might include:

  • Householders faced negative equity after the crash of 1992. House prices fell by 15% in 91-92, therefore, many homeowners were simply unable to re-mortgage because their house price had fallen
  • Also in the period post the housing crash of 1991-92. Confidence in the housing market was less strong and so people were reluctant to withdraw out of fear that house prices may fall again. By, 2000, the fear of a housing slump had been replaced by optimism over rising prices, therefore, more homeowners were willing to re-mortgage and take out equity.


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