Whether or not rising mortgage rates cool the housing market, they're going to put a multi-billion-dollar dent in consumer spending -- and soon.
That could have big implications not just for housing, but for U.S. economic growth, economists said.
Mortgage debt now stands at record levels, having risen $1 trillion last year alone, and dwarfing other types of consumer debt, like credit cards. Homeowners have turned the equity they have in their homes into a virtual ATM, supplementing their household cash flow through additional mortgage borrowing.
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Rising interest rates will not only raise monthly payments on millions of loans. It could close that ATM for many households unwilling to refinance again at higher rates. And without that ready source of cash, there will be less money to spend on everything from clothing to appliances.
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