Applications for mortgage loan refinancings rose slightly last week as homeowners took advantage of low rates, despite a scant rise in U.S. mortgage rates, a report said on Wednesday.

The Mortgage Bankers Association said its measure of demand for mortgage refinancings, the refinancing index, rose 0.1 percent to 4,988.7 in the week ended March 19. Refinancings accounted for over 60 percent of loans processed by lenders last week, and the volume of refinancings is at its highest point in eight months, according to the MBA.

Average interest rates on 30-year mortgages rose 0.1 basis point to 5.28 percent in the March 19 week, but are down 43 basis points from a year ago.

"There is a lot interest in refinancing at these interest rates. This story still is not over," said Drew Matus, senior financial economist at Lehman Brothers.

The pace of lending, already lively, is expected to continue at a hectic pace in coming weeks, economists said.

"It is going to be maintained for the next couple of weeks. Two-thirds of the loans could be refis," said Frank Nothaft, chief economist at Freddie Mac on Tuesday before the report was released. "Any time you have mortgage rates at such a low level, there is a lot of incentive for families to come out and refinance their mortgage."

According to Nothaft, 30-year home loan rates last September were at about 6.25 percent. Now, with rates at 5-3/8 percent borrowers can save close to three-quarters of a percentage point in borrowing costs, the Freddie Mac economist said.

Refinancings help borrowers cut monthly mortgage costs. They can also help home owners draw equity from their homes through cash-out refinancings.

"I think what this shows is that low rates have the potential to continue to help prop up the consumers, at least in the near-term," said Lehman's Matus.

In 2003, U.S. home owners who refinanced, converted almost $139 billion in home equity into cash. Much of that went into consumer spending on goods and services, according to Freddie Mac.

Source MBAA

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