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The effects of recent mortgage refinancing

Author

Listed:
  • Peter J. Brady
  • Glenn B. Canner
  • Dean M. Maki

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.

Suggested Citation

  • Peter J. Brady & Glenn B. Canner & Dean M. Maki, 2000. "The effects of recent mortgage refinancing," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), vol. 7(Jul), pages 441-450.
    • Handle: RePEc:fip:fedgrb:y:2000:i:jul:p:441-450:n:v.86no.7
    DOI: 10.17016/bulletin.2000.86-7
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    File URL: http://www.federalreserve.gov/pubs/bulletin/2000/0700lead.pdf
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    Citations

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    Cited by:

    1. Li, Jieying & Zhang, Xin, 2017. "House Prices, Home Equity, and Personal Debt Composition," Working Paper Series 343, Sveriges Riksbank (Central Bank of Sweden).
    2. Nathalie Girouard & Sveinbjörn Blöndal, 2001. "House Prices and Economic Activity," OECD Economics Department Working Papers 279, OECD Publishing.
    3. Declan French & Donal McKillop & Tripti Sharma, 2017. "Analysis of Housing Equity Withdrawal by its Forms," CHaRMS Working Papers 17-04, Centre for HeAlth Research at the Management School (CHaRMS).
    4. Sergio Clavijo & Michel Janna & Santiago Muñoz, 2004. "LA VIVIENDA EN COLOMBIA: Sus Determinantes Socio-Económicos y Financieros," Borradores de Economia 3099, Banco de la Republica.
    5. Atif Mian & Amir Sufi, 2011. "House Prices, Home Equity-Based Borrowing, and the US Household Leverage Crisis," American Economic Review, American Economic Association, vol. 101(5), pages 2132-2156, August.
    6. Clavijo, Sergio & Janna, Michel & Muñoz, Santiago, 2005. "The Housing Market in Colombia: Socioeconomic and Financial Determinants," IDB Publications (Working Papers) 1548, Inter-American Development Bank.
    7. Xiaoqing Zhou, 2022. "Mortgage borrowing and the boom-bust cycle in consumption and residential investment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 44, pages 244-268, April.
    8. Clavijo Sergio & Michel Janna & Santiago Muñoz, 2005. "La vivienda en Colombia: sus determinantes socioeconómicos y financieros," Revista Desarrollo y Sociedad, Universidad de los Andes,Facultad de Economía, CEDE, March.
    9. Thomas Crossley & Peter Levell & Hamish Low, 2020. "House Price Rises and Borrowing to Invest," IFS Working Papers W20/2, Institute for Fiscal Studies.
    10. Ludwig, Alexander & Sløk, Torsten, 2004. "The relationship between stock prices, house prices and consumption in OECD," Sonderforschungsbereich 504 Publications 04-12, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    11. Alan Greenspan & James Kennedy, 2008. "Sources and uses of equity extracted from homes," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 24(1), pages 120-144, spring.
    12. Xiaoqing Zhou, 2022. "Mortgage borrowing and the boom-bust cycle in consumption and residential investment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 44, pages 244-268, April.
    13. Mr. Alexander Ludwig & Mr. Torsten M Sloek, 2002. "The Impact of Changes in Stock Prices and House Priceson Consumption in OECD Countries," IMF Working Papers 2002/001, International Monetary Fund.
    14. Sergio Clavijo & Michel Janna & Santiago Muñoz, 2004. "La Vivienda en Colombia: Sus Determinantes Socio-Económicos y Financieros," Borradores de Economia 300, Banco de la Republica de Colombia.
    15. Jeffrey R. Campbell & Zvi Hercowitz, 2004. "The Dynamics of Work and Debt," NBER Working Papers 10201, National Bureau of Economic Research, Inc.
    16. Souphala Chomsisengphet & Anthony Pennington-Cross, 2006. "Subprime refinancing: equity extraction and mortgage termination," Working Papers 2006-023, Federal Reserve Bank of St. Louis.
    17. Jill Wetmore & Chiaku Ndu, 2006. "Mortgage Refinancing Activity: An Explanation [1990–2001]," The Journal of Real Estate Finance and Economics, Springer, vol. 33(1), pages 75-86, August.
    18. Maruška Vizek, 2011. "The Influence of Stock Market and Housing Wealth on Consumption Expenditures in Transition Countries," Research in Economics and Business: Central and Eastern Europe, Tallinn School of Economics and Business Administration, Tallinn University of Technology, vol. 3(1).

    More about this item

    Keywords

    Mortgages; Housing - Finance; Interest rates;
    All these keywords.

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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