Presumably, they would do that only if for example they were sure that they had job security, or if they gained a rise in pay, and so on. And that cuts out a lot of people already, because we know there is a lot of job insecurity.
No. It's not a rational thing. Until very lately, people who had hi-tech jobs thought that a job and at least a 5% raise a year was theirs for the asking, forever. Now, they're finding out otherwise. But it doesn't really matter because once you get used to a certain "lifestyle" you feel like a failure if you don't keep it up....so you refinance. And, let's face it, life in the U.S. is mostly about consumption. So people consume. My ex-sister in law, whom I weaned off heroin seven years ago is a truck-driver, plagued by stints on disablity, but she's on her second mortgage, and every time I go and visit, she's got a bigger TV and more crap. It was all captured perfectly in a New Yorker cartoon a couple of weeks ago: wife and husband are sitting in the living room; their tv takes up an entire wall. They are sitting in front of it, and one says to the other "So, dear, what shall we do tonight?"
I think we're headed for real trouble, but Doug thinks I'm being a lefty doomsayer and that capital is a lot more robust than we suspect. We'll see.
Joanna