Although many U.S. residential property owners once viewed their homes as ATMs, it's apparent that attitudes have changed. In fact, as the following chart suggests, the link between retail spending and mortgage refinancing activity appears to be broken.
One likely explanation for the shift is that refis nowadays are primarily geared towards reducing monthly mortgage payments and outstanding debt, not at having more spending power available. No doubt still-dysfunctional lending markets, various government stimulus programs, and other post-financial crisis realities are also playing a part.
Under the circumstances, those who believe that non-purchase-related mortgage activity is an indicator of future consumption trends might want to reconsider.
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