Journal Article

The effects of recent mortgage refinancing

Abstract: Rising home prices and generally falling interest rates in recent years, together with a desire to convert the accumulated equity in their homes into spendable funds, have prompted many homeowners to refinance their mortgages. In the spring of 1999, the Federal Reserve surveyed consumers to determine the extent of refinancing, the extent to which refinancing homeowners "cashed-out" some of their equity when they refinanced, how much equity they took out, and how they spent the funds. Survey results suggest that cash-out refinancings in 1998 and early 1999 likely boosted consumption spending a bit, may have had a larger effect on home improvement spending, and may have moderated the growth of consumer credit during that period.

Keywords: Mortgages; Housing - Finance; Interest rates;

JEL Classification: R21;

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Bibliographic Information

Provider: Board of Governors of the Federal Reserve System (U.S.)

Part of Series: Federal Reserve Bulletin

Publication Date: 2000

Volume: 07

Issue: Jul