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Encourage housing equity withdrawal.
First, they play down the link between mortgage-equity withdrawal and consumption, pointing out that the pace of equity withdrawal has already slowed without dire consequences.
Existing levels of debt will add to the decline in housing equity withdrawal.
At one point in 2006, equity withdrawal accounted for 4.7% of total spending in the economy.
Housing equity withdrawal has been an important addition to spending above routine living costs.
Housing equity withdrawal has been used significantly to support consumer spending in recent years.
Similar(8)
Although house prices did not fall, this housing-equity withdrawal plunged after 2001, removing a powerful stimulus to spending.Housing-equity withdrawal has also fallen sharply over the past year in Britain and Australia, denting household spending.
This has boosted consumer spending as households have borrowed back some of that wealth through mortgage-equity withdrawal.
First, cheap credit, especially lease finance, and home-equity withdrawal let people buy more expensive cars in recent years.
Goldman Sachs estimates that total housing-equity withdrawal rose to 7.4% of personal disposable income in 2004.
But house prices continue to rise sharply, keeping consumer spending strong as home-owners released wealth through mortgage-equity withdrawal.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com