In seasonally adjusted terms, the Bank’s measure of housing equity withdrawal (HEW)
2011 Q4 was -£8.5bn, in line with the figure for 2011 Q3 (Table A). HEW as a percentage of post-tax income was -3.2% in 2011 Q4, unchanged from the percentage for 2011 Q3.
The negative figures indicate a continued injection of housing equity by households overall, with the net flow of lending secured on dwellings remaining weaker than their investment in housing. The flow of secured lending remained positive (Table A).
The decline in HEW – and move to injections of housing equity - since the start of the financial crisis (Chart 1) has not been associated with an increase in repayments of secured debt. Chart 2 shows that gross secured loan repayments have fallen since that time, which has reflected both lower housing market activity and a reduction in remortgaging. An article in the 2011 Q2 Quarterly Bulletin
explains that the fall in housing equity withdrawal since the financial crisis is likely to reflect a fall in the number of housing transactions, with little sign that households in aggregate are making an active effort to pay down debt more quickly than in the past (see Reinold, K, ‘Housing equity withdrawal since the financial crisis’, Bank of England Quarterly Bulletin
, 2011 Q2, pages 127-133).
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Housing equity withdrawal (HEW) is classed as the balance of effects on the stock of housing equity from:
- Changes in the stock of secured lending when households take out or repay debt.
- Changes in the stock of housing wealth, e.g. when new properties are built or improvements are made to existing properties.
The stock of housing equity can also change as a result of revaluations of the stock of housing wealth due to changes in house prices, but this is not included in HEW.
Table A: Housing Equity Withdrawal (HEW) and lending secured on dwellings
Revisions to Housing Equity Withdrawal
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Next release date: 04 July 2012