Source: NYT > Business (paywall)
As credit card debt reaches crisis levels, homeowners are increasingly using cash-out refinances to consolidate high-interest debt—trading unsecured consumer debt for secured mortgage debt at lower rates. The strategy signals both immediate financial stress and a structural problem: wage stagnation and inflation have depleted household cash reserves enough that Americans are mortgaging housing wealth to cover near-term consumption gaps rather than cutting spending or raising income. The trend exposes how fragile middle-class balance sheets remain despite rising property values, and it creates a feedback loop where housing becomes collateral for lifestyle maintenance instead of a long-term wealth asset.