Mortgage refinancings are adding an average of $110 a month to family cash flow, said Paul Merski, chief economist for the Independent Community Bankers of America.
The latest wave of refinancing peaked in May, Merski said, but it has helped free up consumer spending for “months ahead.”
Banks this year will make a record $3.2 trillion of mortgage loans, Merski said, up from $2.5 trillion last year.
Three-quarters of the mortgage lending volume during this year’s first half came from refinancings, said Frank Nothaft, chief economist for Freddie Mac, but that will slacken slightly during the year’s second half.
Fannie Mae Chief Economist David Berson predicted that mortgage rates will remain below 6% this year, but their upward direction will begin reducing refinancings.
Next year, refinancings are likely to “tumble” to $850 billion, down from an expected $2.6 trillion in 2003, Berson said.
An audio recording of the teleconference is available for 90 days following the event on July 9.