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.