The Refinance Mortgage Surge – Not So Much!

Diana Olick writes for CNBC that the refinance boom is not going to pump much money into the economy.

A typical year sees a trillion dollars worth of mortgages getting refinanced, saving homeowners about $10 billion a year.

So with lower rates, we might have more a surge into the economy of a few billion dollars. Not so much. Not such a stimulus.

Report: There are many drags this time around that will diminish the effects of the plunge in Treasury Bond yields especially into Q4.

mortgage rates have to drop further each refi-boomlet to get the same impact;
there are fewer homeowners in aggregate that can benefit or are able to refi this time around;
banks don’t want portfolio run-off and may not pass the full benefit onto the borrowers / banks won’t wan to increase risk in order to drive new portfolio loan volume.
and the QM/QRM rules and GSE/FHA loan amount reductions on tap will reduce the number of eligible borrowers even further.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (, he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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