Refi To The Rescue? Nope.

Note: Charts from Yardeni Research 

Unlike Europeans, most Americans own their homes.  They finance their purchases with fixed rate mortgages which they can refinance relatively easily if/when interest rates move significantly lower from where they originally borrowed the money.  Thus, refinancing can be a  pretty good source of additional spending money - when available. 

Since interest rates usually drop significantly during recessions, refinancing is a type of cushion which allows homeowners a bit of wiggle room to weather a down cycle.  But, I think not this time. You see, mortgage interest rates were at historical lows for at least a decade before they zoomed up. There just aren't as many borrowers today with higher interest costs as previously, even if rates go crashing back down in the near future.

Understandably, refinancing activity has collapsed down to near zero.

And even though homeowner equity is at record levels due to higher real estate prices, owners won't be able to tap into it to bolster their finances any time soon. At least, not at interest rates that will make the exercise financially sensible.

With unemployment still near record lows and with ongoing robust job openings Americans are still ok.  But if/when a recession hits and people start losing their jobs en masse (already happening in  high tech) the refi window will not come to the rescue.