Mortgages locked in at low costs...
provided US consumers with an extra $600 billion in spending cash since 2022, blunting the impact of the Federal Reserve’s interest-rate hikes, according to analysis by the Swiss Re Institute.
The effect has been to mute the impact of monetary policy transmission, as consumer demand proved resilient to Fed hikes.
The same mechanism will likely counteract the effectiveness of rate cuts that the Fed is now planning, and make it harder to stimulate consumer demand if the economy slows.
The median home price has risen some 60% since early 2020 and credit card delinquencies are above pre-pandemic levels, pointing to larger household debt burdens that will only see limited relief from lower borrowing costs.
Bloomberg 26 August 2024
Most US Mortgage Rates Were Locked in During Pandemic Lows
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