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The Home ATM Open in Q4 2021; Closing in 2022, aka Mortgage Equity Withdrawal (MEW)

by Calculated Risk on 3/10/2022 02:32:00 PM

Today, in the Real Estate Newsletter: The Home ATM Open in Q4 2021; Closing in 2022


First, here is the quarterly increase in mortgage debt from the Federal Reserve’s report since 2000. In the mid ’00s, there was a large increase in mortgage debt associated with the housing bubble.

In Q4 2021, mortgage debt increased $245 billion, the largest quarterly increase since 2006. Note the almost 7 year 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 MEW.

The bottom line is the recent increase in MEW is not concerning – it is far less as a percent of disposable personal income than during the bubble, and most homeowners have substantial equity.

Also, it is very likely that MEW will decrease sharply in 2022 as refinance activity declines due to higher mortgage rates. I expect significantly lower levels of MEW in 2022.

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