Mortgage Borrowing Revisited: A Study of Mortgage Equity Withdrawal in Sweden 2004-2006

Abstract: The aim of this master’s thesis is to find out to which extent Swedish households with residential mortgages have withdrawn funds by increasing their mortgage debt, and what they have done with the funds withdrawn. Households’ motives for withdrawing funds are also examined, as are the gross and net amounts withdrawn by a sample of Swedish mortgage takers in the 2004-2006 period. These figures are compared with an aggregate measure of mortgage equity withdrawal provided by the Swedish Riksbank. It is found that the most common uses for withdrawn equity are home improvements and vehicle purchases. The gross amounts of housing equity withdrawn have been substantial during the period, but it cannot be concluded that households with residential mortgages have caused a net flow of equity from the housing market when injections are accounted for.