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

Author

Listed:
  • Alexander Al-Haschimi
  • Margaret M. McConnell
  • Richard Peach

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 However, a look at household assets and liabilities suggests that consumers have used the withdrawn funds to restructure their balance sheets and reduce their debt service burden.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.

Suggested Citation

  • Alexander Al-Haschimi & Margaret M. McConnell & Richard Peach, 2003. "After the refinancing boom: will consumers scale back their spending?," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 9(Dec).
    • Handle: RePEc:fip:fednci:y:2003:i:dec:n:v.9no.12
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    References listed on IDEAS

    as
    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 955-975, November.
    2. Glenn B. Canner & Karen E. Dynan & Wayne Passmore, 2002. "Mortgage refinancing in 2001 and early 2002," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), vol. 88(Dec), pages 469-481, December.
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    Cited by:

    1. Gerhard Illing, 2004. "Monetary policy in the United States – the Fed in the interest-rate trap?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 57(06), pages 31-37, March.
    2. Mr. Vladimir Klyuev & Mr. Paul S. Mills, 2006. "Is Housing Wealth An 'ATM'? the Relationship Between Household Wealth, Home Equity withdrawal, and Saving Rates," IMF Working Papers 2006/162, International Monetary Fund.
    3. Andrew Kish, 2006. "Perspectives on recent trends in consumer debt," Consumer Finance Institute discussion papers 06-05, Federal Reserve Bank of Philadelphia.
    4. Illing, Gerhard & Klüh, Ulrich, 2004. "Vermögenspreise und Konsum," Discussion Papers in Economics 316, University of Munich, Department of Economics.
    5. Benoit Mojon, 2007. "Monetary policy, output composition and the Great Moderation," Working Paper Series WP-07-07, Federal Reserve Bank of Chicago.
    6. Yamashita, Takashi, 2007. "House price appreciation, liquidity constraints, and second mortgages," Journal of Urban Economics, Elsevier, vol. 62(3), pages 424-440, November.
    7. Guy Debelle, 2004. "Macroeconomic implications of rising household debt," BIS Working Papers 153, Bank for International Settlements.
    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.
    9. Guy Debelle, 2004. "Household debt and the macroeconomy," BIS Quarterly Review, Bank for International Settlements, March.

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