The slow economic growth that sparked the recent rallies in the bond market is also tempering housing demand, economists say. As a result, only a minor and short-lived gain in mortgage volume is expected. And the consensus is that rates should float back up for the balance of the year.

Lenders, inured to volatility in interest rates because of the rough ride over the last few years, were cautious about the impact of slightly lower rates and most said they expected the present moderate pace of originations to continue.

A spokesman for PNC Mortgage Corp. in Vernon Hills, Ill., for example, said his company saw a brief flurry of originations in late July and early August, but it has since abated - even as rates slipped.

At the Mortgage Bankers Association, chief economist David Lereah said, "The recent drop in rates should certainly help prolong the existing level of loan originations, but it's not going to push business up very much."

Even after the plunge of about four-tenths of a percentage point in long-term rates, 30-year fixed mortgages continue to cost almost a full point more than in February, economists and lenders note. The upward rate trend that began then killed a small boom in refinancings.

Mr. Lereah has slightly increased his estimate of 1996 mortgage volume, to $765 billion, from the $760 billion he was predicting a month ago. And he has chopped his forecast for next year to $651 billion, from $670 billion, as interest rates drift up again.

The association reported that in the week ended Aug. 9, applications for mortgages dropped by about 3%. A 21% gain in the currently small refinancing sector was insufficient to offset softness in purchase applications, which fell 8%.

Reflecting the purchase weakness, the Commerce Department reported Friday that housing starts fell nationally by a less-than-expected 1.3% in July. The department also revised its June figure to a decline of three- tenths of 1%, from a previously reported gain of 1.3%.

Stuart Hoffman, chief economist at PNC Bank Corp. in Pittsburgh, said: "The drop in rates was not enough to fully invigorate the housing market, which appears to have peaked. Its best days were in late spring."

He expects mortgage rates to return to between 8% and 8.25% in the next several months and says the Fed could push rates up after the presidential election. The major impact of such a move, he said, could be on adjustable- rate mortgages.

David Seiders, chief economist for the National Association of Home Builders, expresses a similar view.

"Will it stick?" he asked, speaking of the bond rally. "Our view is that some of it will stick, but the markets are still going to be fairly skittish about inflation. I made a mortgage forecast of 8.1% for the balance of the year. I expect the rate to return to around 8% or a bit higher with the Fed not moving."

He added: "There's been some slowing of single-family activity, some of it rate related. We've had unsustainably strong housing numbers, and now we're seeing just a modest decline in housing activity."

Paul Spiroff, director of corporate planning for Mortgage Guaranty Insurance Corp. in Milwaukee, echoed Mr. Seiders' view: "Looking at things in reverse, what could slow the remarkable purchase market? Activity has been flat, and we have not seen any noticeable downtick in purchase activity yet." He said the only reason to believe the housing market would slow was that it had been strong for so long.

He said this week's figures on mortgage applications would clarify the refinancings picture. The applications numbers normally lag rate changes by about two weeks, he explained.

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