Moreover, homeowners with underwater mortgages may find it difficult or impossible to take advantage of low interest rates by refinancing their mortgages, even if they are current on their payments.6 The state of housing and mortgage markets may also be holding back the recovery of our financial system and the normalization of credit conditions.
Most immediately, base effects are likely to contribute substantially to the 12month readings of headline and core PCE inflation in April and May as the price declines of March and April 2020 roll out of the 12-month calculation.