Here are the Kennedy-Greenspan estimates (NSA - not seasonally adjusted) of home equity extraction for Q2 2008, provided by Jim Kennedy based on the mortgage system presented in "Estimates of Home Mortgage Originations, Repayments, and Debt On One-to-Four-Family Residences," Alan Greenspan and James Kennedy, Federal Reserve Board FEDS working paper no. 2005-41.



Click on graph for larger image in new window.



For Q2 2008, Dr. Kennedy has calculated Net Equity Extraction as $9.5 billion, or 0.3% of Disposable Personal Income (DPI).



This graph shows the net equity extraction, or mortgage equity withdrawal (MEW), results, both in billions of dollars quarterly (not annual rate), and as a percent of personal disposable income.



Last week the Bank of England reported that MEW was slightly negative in the UK in the 2nd quarter.



Less equity extraction means less consumption over the next few quarters. I'll have more on this later ...