How Much Are Car Purchases Driven by Home Equity Withdrawal

We use data from three nationally representative surveys to document that very few households report purchasing cars with home equity lines of credit or the proceeds from a cash-out refinancing. Households that do report using these sources of funds to purchase cars tend to be affluent and appear to have ample access to credit. These findings suggest that an easing of home-equity borrowing constraints was not the major factor driving any relationship between home prices and car sales during the housing boom in the 2000s. We discuss other mechanisms that might underlie this relationship.