Low mortgage rates have cut the cost of borrowing, driving down the interest that Americans pay on home loans to the slowest pace in almost 14 years. But that doesn’t mean that families are splurging. And despite a run-up in home prices over the past year, few are pulling cash out of their homes and credit-card debt is continuing to tumble.
Memories of the financial meltdown may be haunting some consumers, including those who have managed to refinance into cheaper loans. And then there’s the labor market, which is adding jobs too slowly to inspire much confidence in workers or to make a substantial dent in the share of long-term jobless workers .
Mortgage-interest payments dropped to a seasonally adjusted annual rate of $381 billion in the first quarter — the lowest tally since the third quarter of 2000, according to U.S. Commerce Department data. The first quarter’s rate was down 36% from a peak pace of $594 billion at the end of 2007.