​During the past two years, lower interest rates have stimulated extensive refunding of long-term debt, sharply increasing the relative volume of financial transactions. Mortgage refinancing has been a highly visible part of those transactions. Richard G. Anderson examines the effect of recent waves of mortgage refinancing on the demand for liquid deposits and growth of the monetary aggregates. Mortgage servicers may hold unscheduled principal payments received following a refinancing in liquid deposits as long as six weeks prior to remittance to the investors who own the underlying mortgage-backed securities. In addition, the growth of other checkable deposits also appears to have been affected by fluctuations in mortgage refinancing, perhaps because of households converting home equity to cash. The persistance of these increased demands for liquid balances illustrates that all transactions are not completed instantaneously, as is implicitly assumed. Anderson finds that the increased mortgage refinancing accounts for a great deal of the volatility of M1’s growth during the last two years, although not for its continued strong underlying trend.