Little consumption upside from home refinancing uptick

The extent to which the recent drop in mortgage rates and flurry of home refinancing can boost consumption is limited, as most homeowners still hold pandemic-era sub-4% loans. While there is some scope for households to borrow more against home equity, we do not expect housing to meaningfully support spending next year. Instead, we anticipate consumption will be underpinned by gradually rising employment growth, a still-low jobless rate sustaining wage gains, and wealth effects associated with the stock market boom.