On December 12, 2019, Fed in Print will introduce its new platform for discovering content. Please direct your questions to Anna Oates

Home About Latest Browse RSS Advanced Search

Board of Governors of the Federal Reserve System (US)
Finance and Economics Discussion Series
How Much Are Car Purchases Driven by Home Equity Withdrawal?
Brett McCully
Karen M. Pence
Daniel J. Vine
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.


Download (Revision)
Download (Original)
Cite this item
Brett McCully & Karen M. Pence & Daniel J. Vine, How Much Are Car Purchases Driven by Home Equity Withdrawal?, Board of Governors of the Federal Reserve System (US), Finance and Economics Discussion Series 2015-106, 01 Dec 2015, revised 24 Oct 2018.
More from this series
JEL Classification:
Subject headings:
Keywords: Auto loans; Auto sales; Cash-out refinancing; Home equity; Home equity lines of credit; Mortgage refinancing; Motor vehicles
DOI: 10.17016/FEDS.2015.106r1
For corrections, contact Ryan Wolfslayer ()
Fed-in-Print is the central catalog of publications within the Federal Reserve System. It is managed and hosted by the Economic Research Division, Federal Reserve Bank of St. Louis.

Privacy Legal