Rate Drop Puts Refi Engine in High Gear.

In late September, refinancing activity hit new peaks as consumers jumped back into the mortgage market, renewing the expectation that portfolio churning will reach a record volume this year.

Following the Sept. 11 assault on America, mortgage applications initially dropped off. But as President Bush and civic leaders called on the country to get back to business, mortgage lenders more than did their part.

In the week ending Oct. 4, the MBA's refinancing index rose to its second highest level since the MBA began its weekly survey of mortgage lending activity in January of 1990. The highest level of refinancing was reported three years ago, in October of 1998. Also in the week of Oct. 4, the average 30-year contract rate dropped to 6.52% in the MBA survey, its third lowest weekly total ever.

And the average rate on 15-year FRM's dropped to 5.93%.

Phil Colling, an economist who is director of research at the Mortgage Bankers Association of America, said that the refi boom, which began in December of last year, has yet to let up and shows no sign of doing so.

Prior to the Sept. 11 assault on America, quite a few people may have been thinking about refinancing their loan but waiting to see what would happen with interest rates. The rate drop shortly after the assault revved up activity for lenders.

"Once people regrouped and reassessed their situation, that population of people who were waiting to refi decided to go ahead and do so," Mr. Colling said.