Falling interest rates do little to induce refinancings by people with poor credit histories, according to a new report by the Federal Reserve Bank of New York.

"Homeowners with poor credit histories and low equity positions cannot meet lenders' underwriting criteria, so they are often blocked from replacement financing to prepay their existing mortgage," said Stavros Peristani, a senior economist at the New York Fed and one of the report's authors.

The situation has broad effects, Mr. Peristani said. "Limited access to new credit short-circuits one channel through which lower interest rates improve household cash flows and improve the economy," he said.

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