Boom 7v7
Sanna Pospicil
Booms are floating, physical barriers to oil, made of plastic, metal, or other materials, which slow the spread of oil and keep it contained. Skilled teams deploy booms using mooring systems, such as anchors and land lines. They commonly place boom:
Skimmers are boats and other devices that can remove oil from the sea surface before it reaches sensitive areas along a coastline. In the photo below, oil is being skimmed from the sea surface by a "vessel of opportunity." Sometimes, two boats will tow a collection boom, allowing oil to concentrate within the boom, where it is then picked up by a skimmer.
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A telescopic boom lift has a mast that extends in a straight line by using one or more telescoping boom sections. This design gives you the vertical reach you need to access overhead jobs, while also providing outstanding horizontal reach. Telescopic boom lifts can require more space to operate compared to articulating models, though they often reach higher and allow you to access work from a distance. This is especially helpful on job sites where difficult terrain or immovable obstacles prevent close-up access to structures.
A boom is also a rapid increase in prices, development, numbers, and the like, as in Thanks to the new majors, the college is experiencing a boom in student enrollment. When an entire economy goes through a period of quick growth, that, too, is a boom.
The first records of the term boom come from the 1400s. It ultimately comes from the German bummen, which is meant to imitate the sound. In the early 1900s, boom began being used to describe a period of economic success and is often associated with the American phrase boom-and-bust cycle.
Most often, though, boom is used to define the sound made by a large, dull impact or a resonating sound from far away. Boom is an example of onomatopoeia, a word that imitates the sound it describes, as in The cars made a boom.
Because booms are often associated with a fast or brutal impact and because sound travels extremely fast from one place to another, boom has several uses related to speed, such as to boom from one side of the field to the other, or in the economic sense, as in business was booming.
In the chart below, we disaggregate the volume of mortgage originations into purchase and refinance mortgages. The COVID refinance boom, which we observe from the second quarter of 2020 through the fourth quarter of 2021, was spurred by a decline in mortgage interest rates of nearly 200 basis points from November 2018 to November 2020. The 2003 refinance boom was similarly spurred by an approximate 200 basis point decline, as was the mini-boom in 2013. But there are at least three characteristics that distinguished the recent boom in refinancing from earlier ones. First, in the 2020-21 pandemic years, interest rates were historically low; many homeowners took advantage of these low rates by extracting equity, reducing monthly payments, or shortening terms. Second, the rebound in mortgage interest rates, after reaching this low, was historically steep. This put a quick end to the surge in refinances. Finally, home equity was at an all-time high leading into the pandemic, and when home prices continued to rise, many borrowers had home equity to tap.
In the chart below, we depict the cash value of nominal equity extraction over time. Between the second quarter of 2020 and the fourth quarter of 2021, we estimate that $430 billion in home equity was extracted using mortgage refinances as shown in the chart below. The pace of equity extraction screeched to a halt when mortgage rates began climbing and quarterly equity extraction volumes were near historic lows in the first quarter of 2023, particularly as a share of disposable personal income, as shown by the red line below. That line also shows that while the recent pickup in cash out is noticeable, as a share of income it is not nearly as consequential as the 2002-05 refi boom.
We expect a correlation between the remaining balances of mortgages and the propensity to refinance. It would make more sense to refinance if the balance is higher since the gain from refinancing is proportional to the balance refinanced. Indeed, this is what we illustrate in the chart below. Less than 10 percent of the mortgages with balances below $100,000 outstanding as of the first quarter of 2020 were subsequently refinanced, compared to nearly half of mortgages with balances between $400,000 and $500,000. Interestingly the propensity starts to decline after $500,000.
In the end, fourteen million mortgages were refinanced during the COVID refinance boom, and these refinances will have effects on the mortgage market for years to come. Many borrowers who refinanced during the boom have improved either their cash flow, through a reduction in payments on their existing properties, or their liquidity by extracting equity from those properties. Approximately five million borrowers extracted a total of $430 billion in home equity from their refinancing. Meanwhile, nine million refinanced their loans without equity extraction and lowered their monthly payments, resulting in an aggregate reduction of $24 billion annually in their annual housing costs. The end of the most recent exceptionally low interest rate period leaves homeowners somewhat disincentivized to sell or change properties: Owners now looking to move will face increased borrowing costs and higher prices, with current home prices being more than 36 percent higher than they had been pre-pandemic. The improved cash flow generated by the recent refinance boom will potentially provide significant support to future consumption.
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