To: reaper who wrote (69594 ) 2/19/2001 6:13:15 PM From: Zeev Hed Read Replies (1) | Respond to Reaper, you are only partially right, and strangely enough, my back of the envelop calculations are not really that far from that report you cite. First, the $5.6 billion in reduction is due to the fact that on the average, the 8.3 MM refinancing involved taking out 18,000 additional cash from the equity (increasing the debt and thus paying interest on a larger debt). The neutral (same debt same maturity) impact was actually $9.2 Billions (or $1,000 per refinancing per year savings). My calculations assumed that a much larger percentage (or actually the potential impact if all take advantage of lower rates) and thus my $100 Billions or so. The true impact should really be in the range of $30 to $40 Billions or so, about $10-12 B in refinancing, about $10-12 B in lower potential cost for those buying new homes (I am estimating 1.5 MM new homes and about 5 to 6 MM used homes) and about 10 MM mortgages that are on variable rates for a similar $10 B in lower costs. You should add to that about another $2.5 B in cheaper financing for the $15 MM cars sold in a year and corporate interest savings are probably double that figure.
