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I am a big believer in the power of “REFI CAPITAL CONVEYOR BELT” and all the” debt-prosperity” that refi-boomette’s bring. In other words, if credit is income and refi’s are big credit, then refi-boomette’s are big income (and revenue).
With a refi, not only can a borrower save hundreds of dollars per month, but take some, or a lot of CASH-OUT to spend however they would like. Some spend it on wine, some on women, and the rest foolishly. But, they all spend every penny, quickly.
Moreover, refi’s generate billions in monthly income and revenue to those in the mortgage business.
Lastly, over 100 individuals work on one refi from loan application printing to trustee services.
Bottom line: Banks and lenders churning HUNDREDS OF BILLIONS OF DOLLARS in refi’s each quarter to the Gov’t vis-a-vis Fannie, Freddie, and FHA are grease to the wheels of the macro economy and homeowners balance sheets, alike.
However, when the belt grinds to a halt the after-effects are felt throughout the economy.
- It’s just not conceivable that the volume of refi mortgage credit can fall by ~70% since mid last year — ~ down $1 trillion on an annualized basis? — and it not drag something down with it.
- One can’t believe the mantra “don’t fight the Fed“ on one hand and deny that housing demand / prices can contract sharply on negative monetary policy or surging interest rates on the other.
Refi’s are at generational lows following the “RATE SURGE” last year. And proven yet again, rates have to go lower and lower each cycle to achieve the same to lower results.
As such, mortgage and consumer spend sit in a precarious position for mortgage, housing, and the consumer from the absolute trashing of the sector in the past months.
ITEM 1) THE REFI CAPITAL CONVEYOR BELT HAS GROUND TO A HALT…