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After the refinancing boom: will consumers scale back their spending?

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Author Info

  • Margaret M. McConnell
  • Richard W. Peach
  • Alex Al-Haschimi

Abstract

Concerns are rising that the recent surge in home equity withdrawal has left consumers in a weakened financial position that will, over time, prompt a retrenchment in spending. However, a look at household assets and liabilities suggests that consumers have used the withdrawn funds to restructure their balance sheets and reduce their debt service burden. As a result, households may be in a better position to spend in the years ahead.

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Bibliographic Info

Article provided by Federal Reserve Bank of New York in its journal Current Issues in Economics and Finance.

Volume (Year): 9 (2003)
Issue (Month): Dec ()
Pages:

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Handle: RePEc:fip:fednci:y:2003:i:dec:n:v.9no.12

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Related research

Keywords: Home equity loans ; Consumer credit ; Consumer behavior;

References

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  1. Bennett, Paul & Peach, Richard & Peristiani, Stavros, 2001. "Structural Change in the Mortgage Market and the Propensity to Refinance," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(4), pages 955-75, November.
  2. Glenn Canner & Karen Dynan & Wayne Passmore, 2002. "Mortgage refinancing in 2001 and early 2002," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Dec, pages 469-481.
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Citations

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Cited by:
  1. Vladimir Klyuev & Paul Mills, 2007. "Is Housing Wealth an “ATM”? The Relationship Between Household Wealth, Home Equity Withdrawal, and Saving Rates," IMF Staff Papers, Palgrave Macmillan, vol. 54(3), pages 539-561, July.
  2. Yamashita, Takashi, 2007. "House price appreciation, liquidity constraints, and second mortgages," Journal of Urban Economics, Elsevier, vol. 62(3), pages 424-440, November.
  3. Andrew Kish, 2006. "Perspectives on recent trends in consumer debt," Payment Cards Center Discussion Paper 06-05, Federal Reserve Bank of Philadelphia.
  4. Gerhard Illing, 2004. "Geldpolitik in den USA - die Fed in der Zinsfalle?," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 57(06), pages 31-37, 03.
  5. Illing, Gerhard & Klüh, Ulrich, 2004. "Vermögenspreise und Konsum," Discussion Papers in Economics 316, University of Munich, Department of Economics.
  6. Guy Debelle, 2004. "Macroeconomic implications of rising household debt," BIS Working Papers 153, Bank for International Settlements.
  7. Benoît Mojon, 2007. "Monetary policy, output composition and the Great Moderation," Working Paper Series WP-07-07, Federal Reserve Bank of Chicago.
  8. John Krainer & Elizabeth Laderman, 2011. "Prepayment and delinquency in the mortgage crisis period," Working Paper Series 2011-25, Federal Reserve Bank of San Francisco.

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