The Ignorant Investor

According to Reuters:

WASHINGTON- Many U.S. homeowners continue to take cash out of their homes even as mortgage rates climb and home sales slip, helping to brace the economy, economists said. This year, Americans who refinance their mortgages are expected to draw $257 billion of wealth out of their homes, according to mortgage finance giant Freddie Mac.

This is an unexpected development. House prices have been leveling off or dropping in some areas, so its an odd time to be taking on mortgage debt. It just goes to show that however cautious the mood is getting among Wall Street economists, the American homeowner doesn't think he's getting fired tomorrow and is happy to keep borrowing large sums of money against his house.

Way down in the article, one commentator explains that homeowners used to dream about burning their mortgages and living without the mortgage payment hanging over their heads every month. But now they are happy to go into serious debt to get cash to keep up their spending habits.

It's a very odd attitude. They're going to have to pay back the money eventually. All they've done is diverted future income they'll earn later into walking around money to blow today on chicks, booze, and fast cars.