Can Refi Boom Go On?(mortgage refinancing)(Brief Article)

Mortgage rates have hovered around the 7% mark during the first two months of this year, almost half a percentage above than their low point last fall.

But that hasn't put a stop to refinancing activity, and most economists expect refinancing to remain strong, especially in the early part of this year.

The Mortgage Bankers Association of America estimates that $2 trillion to $2.5 trillion of outstanding mortgages remain candidates for refinancing at today's rates, but MBA chief economist Douglas Duncan says variables such as cash-out refinancing and home price appreciation make projections tricky.

"It's actually an interesting time to be forecasting this, because there are more moving parts this time than there were three or four years ago," he said.

For instance, the ability of upper-income homeowners in some markets to refinance their loans may be constrained by falling home values. Already, high-end home prices have dropped in some markets heavily affected by the dot-com and technology sectors.

Meanwhile, for some homeowners, strong appreciation in recent years is the "rocket fuel" that has added impetus to refinancing, since many homeowners have chosen to tap into the equity that has built up in their homes.

Frank Nothaft, chief economist at Freddie Mac, says the refinancing boom still has some legs to it, but there is evidence of "burnout" as ...