The Wall Street Journal had an interesting story entitled “U.S. Firms Slash Interest Tab in $100 Billion Refinancing Blitz.”
Rising interest-rate expectations are fueling the biggest corporate-refinancing boom in years.
U.S. companies refinanced $100 billion of loans in January, the largest monthly total in at least a decade, according to data from S&P Global Inc. More than 110 low-rated companies, including software giant Dell Technologies Inc. and car-repair chain Service King Collision Repair Centers Inc., have refinanced loans since October, according to data from LevFin Insights LLC.
Well, while corporations are refinancing their debt expecting a rise in interest rates, American households are not.
Even the WSJ had a dour forecast for residential mortgage refinancing from 2016.
So, why are corporate bond refinancings so fluid while residential mortgage refinancings are so tepid?
One reason is that borrowers and lenders remained handcuffed (not the Fifty Shade of Grey-type handcuffs) by the regulations that occurred to allegedly prevent another financial crisis. Like tighter lending standards, additional red tape and super-sized home prices.
Its been over 10 years since the housing bubble began to burst (10 years after), and now fewer households can take advantage of super low mortgage rates thanks, in part, to handcuffs wielded by the Consumer Financial Protection Bureau and Dodd-Frank. And not the 50 Shades of Grey kind, either.