...And Refinancing Doesn't Always Give Consumers More Cash

Concern over the size of debt obligations isn't the only reason consumer spending has remained depressed. Another is that mortgage refinancing is putting less cash in consumer pockets than the statistics suggest. For one thing, refinancing involves hefty ancillary costs, such as points and other fees. Experts say it takes homeowners a year or so just to recoup such costs.

The steep yield curve is also encouraging many households to replace 30-year mortgages with 15-year obligations. That reduces interest payments but not necessarily total monthly payments, since borrowers amortize their mortgages more rapidly. In essence, such households are tying themselves into forced savings plans that leave little extra cash to finance increased spending.

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