How Much Are Car Purchases Driven by Home Equity Withdrawal?

Brett McCully, Karen Pence and Daniel J. Vine
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Daniel J. Vine: https://www.federalreserve.gov/econres/daniel-j-vine.htm

No 2015-106, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: Previous research indicates that changes in housing wealth affect consumer spending on cars. We find that home equity extraction plays only a small role in this relationship. Consumers rarely use funds from equity extraction to purchase a car directly, even during the mid-2000s housing boom; this finding holds across three nationally representative household surveys. We find in credit bureau data that equity extraction does lead to a statistically significant increase in auto loan originations, consistent with equity extraction easing borrowing constraints in the auto loan market. This channel, though, accounts for only a tiny share of overall car purchases.

Keywords: Auto loans; Auto sales; cash-out refinancing; Home equity; Home equity lines of credit; Mortgage refinancing; Motor vehicles (search for similar items in EconPapers)
JEL-codes: D12 D14 E21 G21 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2015-12-01
New Economics Papers: this item is included in nep-tre and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: How Much Are Car Purchases Driven by Home Equity Withdrawal? (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2015-106

DOI: 10.17016/FEDS.2015.106r1

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