Mortgage Refinance Applications Are Collapsing. What’s the Impact on the Economy & Markets?

by Wolf Richter
Wolf Street

Consumer spending and asset prices both were boosted by them.

Homeowners refinance their homes largely for two reasons: One, to benefit from lower interest rates and thereby reduce the monthly payment; or to extract cash from their home whose price has risen. Lower mortgage payments leave homeowners a little extra spending cash every month. And a cash-out refi generates a pile of cash all at once, which can be used to remodel the home, buy stocks or cryptos to get rich quick, pay off maxed-out credit cards that carry 25% interest, make a down payment on a rental property or vacation home, or blow in other ways. Both types of refinancings provide extra oomph for consumer spending and the markets, including the stock and real estate market.

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