Today’s chart comes from Calculated Risk and calculates the Mortgage Equity Withdrawal (MEW), as a percentage of disposable income. This is derived from the Fed Flow of Funds Data, as explained:
This is an aggregate number, and is a combination of homeowners extracting equity (hence the name “MEW”, but there is little MEW right now!), normal principal payments and debt cancellation.
For the third quarter of 2011, US households extracted minus $75 billion – i.e they paid off the equivalent of 12.5% of QE2 in home loans, approx. 2.6% of their disposable income used to do so.
Over the last fourteen quarters, mortgage debt has declined by some $730 billion, mainly due to debt cancellations and modifications.
Remember to keep an eye on this side of the ledger when predicting inflation amidst rounds of QE as de-leveraging continues.