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Mortgage Refinance Costs and a Better Adjustable-Rate Mortgage Contract, No. 21-38

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Mortgage Refinance Costs and a Better Adjustable-Rate Mortgage Contract, No. 21-38

DATE: November 2021

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ABSTRACT: Using data from the latest refinance wave, this Economic Brief estimates the mortgage refinance transaction costs paid by the borrowers in 2020 at $44.5 billion. Financing homeownership with a sequence of conventional fixed-rate mortgage products implies additional, indirect costs. A simple redesign of the adjustable-rate mortgage contract offers potential for eliminating these costs and, thus, improving both homeownership affordability and the transmission of interest rate cuts to the final users of credit.

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Grochulski, Borys and Federal Reserve Bank of Richmond. "Mortgage Refinance Costs and a Better Adjustable-Rate Mortgage Contract, No. 21-38," Economic Brief (November 2021). https://fraser.stlouisfed.org/title/6034/item/610036, accessed on June 2, 2023.

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