Housing ATM is Back (But it won't work any better this time)
Refis at 8-Year Lows
With mortgage rates rising, one would expect refi activity to slow. And it has: Refi Applications are at an 8-Year Low.
But why is there any refi activity all at all?
In September 2017 the MND mortgage rate rate was 3.85%. In June 2016, the MND rate was 3.43%.
It makes little sense to refi at 4.70% when one could have done it less than two years ago a point and a quarter lower.
At these rates, refi activity should be in the low single digits. Yet, 36% of mortgage applications are refis.
Are people pulling money out of their houses to pay bills?
That's how it appears, as Cash-Out Mortgage Refis are Back.
What's Going On?
- People feel wealthy again and are willing to blow it on consumption
- People pulling money out to invest in stocks or Bitcoin
- People are further and further in debt and need to pull out cash to pay the bills
I suspect point number three is the primary reason.
Regardless, releveraging is as wrong now as it was in 2007. Totally wrong.
Mike "Mish" Shedlock