Dematerialising money? Observations on the flow of wealth from housing to other things

Abstract

This paper examines the extent and relevance of mortgage equity withdrawal (MEW) in the UK. MEW has, of late, been of most interest as a mechanism transmitting the wealth effects of housing into whole economies. Its implications for housing and social policy are less well documented. To redress the balance, the paper first offers a critique of data resources, before drawing from five substantial surveys to document the growing significance and changing style of MEW among British home buyers. The analysis focuses particularly on the under-explored question of what secured loans are spent on, identifying a trend away from reinvestment into housing, towards the consumption of other things. The study concludes by arguing that ‘wealth effects’ might usefully be recast as ‘equity leakage’ if the aim is to safeguard the quality of the stock and appreciate the limits to housing wealth as an asset base for welfare.