Refinancing Starting to Boom.

St. Louis -- The recent drop in interest rates combined with relatively low home prices has driven up mortgage refinance applications in many markets across the country. And for the last several weeks, lenders have seen spikes in refis.

Despite the negative news regarding subprime loan issues, rising foreclosures and home price depreciation, consumers are getting the message that home financing opportunities are alive and well, according to Scott Stern, CEO of Lenders One here.

The Fed lowered the funds rate 120 basis points in 10 days, the largest drop in history, he said. "Consumers realized the impact it had on mortgage rates. They are contacting their lenders about refi opportunities in heavy numbers."

For Lenders One member companies from coast to coast, North to South, from Florida to Illinois, Washington state to California, origination volume for refinances are very high, he said.

"The biggest activity is for traditional agency borrowers, the ones who are not in trouble. These are A-paper good borrowers, looking for a rate and term refinance."

Of course, many borrowers are refinancing to relieve pressure of bad loan products the industry saw in abundance over the last couple of years. Near-record numbers show borrowers are refinancing out of subprime loans into FHA, he said. Statistically speaking, in January 2007, 1% out of $3 billion in loans were FHA refinances for the company. That amount was 30% in February 2007, said Mr. Stern.

"FHA has always been a superior product for borrowers with less-than-perfect credit. It's one of the most encouraging stories to come out of the subprime issue over the last 12 months."