Refinance Rebuilds U.S. Savings as Growth Delayed: Economy

http://www.bloomberg.com/news/2012-08-13/refinance-jump-rebuilds-u-s-savings-as-growth-delayed-economy.html

Americans’ drive to rebuild savings and pay down debt may mean the gains from the current mini boom in mortgage refinancing will accrue over years rather than have a more immediate effect on the U.S. economy.

Aided by record-low interest rates and an expansion of government programs, the value of home loans refinanced this year will rise to $932 billion from $858 billion in 2011, according to projections from the Mortgage Bankers Association. The group’s gauge tracking the volume of credit being reworked climbed at the end of July to the highest level in three years.

The typical borrower redoing a $200,000 mortgage last quarter will save about $2,900 in interest over the next year, according to figures from Freddie Mac. Nonetheless, the extra cash may not be spent soon as households continue to focus on repairing finances.