Mortgage Refinancing as Stimulus

Today, the effective interest rate on mortgage debt is 5.28 percent, which generates $548 billion per year in mortgage interest payments. If the effective interest rate on outstanding mortgages were reduced to 4.66%, mortgage interest payments would fall by $67 billion per year, argues e21.com. Taking the rate down to the average spread over the Fed policy rate (a 4.14% effective mortgage rate) would reduce annual mortgage payments by $120 billion. This would be a huge stimulus for the economy.