The $600 billion consumption potential of American consumers comes from locking in low-rate mortgages in advance

The latest analysis from the Swiss Re Institute indicates that due to many American homeowners locking in low-rate mortgages ahead of time, their sensitivity to the Fed's rate hikes has decreased, leading to a weakened impact of rate hikes on consumption. Since 2022, these low-rate mortgages have released approximately $600 billion in additional spending power, accounting for nearly 2% of personal consumption expenditure. This phenomenon may compel the Fed to implement larger rate cuts in the future to stimulate the economy. Furthermore, with the median home price rising by about 60% since early 2020, coupled with credit card delinquency rates higher than pre-pandemic levels, many households are facing increased debt burdens, limiting the relief effects of rate cuts