How About That?

On Monday, Bloomberg news reported that economists Mahir Rasheed and James Finucane at the research arm of insurance firm Swiss Re, estimated that mortgage rates locked in at low levels afforded US consumers approximately $600B in spending cash since 2022. As the FOMC increased short-term interest rates over that time, according to this report, this aided some consumers in being a bit more resilient in the face of increased borrowing costs. Effectively, this muffled the impact of those rate hikes. The concern is now that moving forward, with median home prices up 60% since the start of the pandemic and credit card delinquencies above pre-pandemic levels, that an FOMC that reduces short-term rates, even aggressively, may only see a limited benefit from this easier policy.