Bernanke's Vigilance Could Boomerang.(mortgages)

Today, the value of mortgage servicing rights is rising as interest rates edge up and portfolio churning slows down. But if there is one lesson to be learned from recent real estate lending cycles, it's don't count the refinancing business out.

Finally, the refinancing mania of recent years appears to have ebbed. While mortgage rates remain at levels that would leave homeowners drooling in the 1980s, at 6.67% at the start of June, actually seemed high to most homeowners who obtained conventional home financing in recent years. In fact, the average 30-year, conforming mortgage rate was the highest it had been in four years in early June, according to Freddie Mac. And at 6.67%, the average 30-year, FRM was 105 basis points higher than it had been one year earlier.

Inflation jitters - and concern that a hawkish Fed will raise rates and restrain growth in order to keep inflation at bay - got the blame for putting upward pressure on rates.

"The Fed released the minutes of its most recent FOMC meeting, which showed that some members were concerned about inflationary pressure. This caused the bond market yields to rise, and brought about market speculation that the Fed may hike rates sooner than had been expected," said Frank Nothaft, Freddie Mac vice president and chief economist. "All this combined to nudge rates up again this week."

While Fredde Mac expects rates to keep rising, Mr. Nothaft said the increase is likely to be steady and gradual. That forecast is echoed by other economists who focus on the real estate finance industry.

Data from the Mortgage Bankers Association also show ...