Mortgage equity withdrawal in Australia: Recent trends, institutional settings and perspectives

Australian tax preferences and asset test concessions have traditionally favoured wealth accumulation in the primary home, with added impetus lent by a decade-long period of sustained house price appreciation prior to the Global Financial Crisis. The primary home is increasingly viewed by governments worldwide as a key store of wealth that can perform a welfare role in retirement in an era of population ageing. We assess whether the institutional environment in Australia encourages mortgage equity withdrawal drawing on a selective international survey focusing on mortgage equity withdrawal mechanisms in six developed countries. We find that Australia’s institutional settings offer a relatively favourable environment for mortgage equity withdrawal that has encouraged Australian homeowners to tap into their housing equity at earlier stages of the life course. To the extent that mortgage equity withdrawal is exercised over the life course (and not just post-retirement), more Australians will approach retirement carrying outstanding mortgage debt burdens. The implications of these findings for the effectiveness of retirement income systems and the role of housing wealth as an asset base for welfare in old age are discussed.OTB - Research for the Built EnvironmentArchitecture and The Built Environmen