Last Wednesday afternoon, after the Federal Reserves fifth rate cut of the year, Countrywide Home Loans national call center experienced a 400% jump in consumer inquiries, the company said.
Though the CNBC-fueled drama of monetary policy in action may inspire some borrowers to refinance a loan or fast-track a purchase, mortgage rates actually hit a low almost two months ago and have been rising steadily since. 
In fact, experts say the Feds moves appear to have little direct impact on mortgage rates, or maybe none.
Looking back at the last 10 rate cuts by the Federal Reserve, mortgage rates were higher four weeks later 60% of the time, according data compiled by HSH Associates, a mortgage research and publishing company in Butler, N.J.
In reality, the Fed is still playing catch-up to where the market has been, said HSH vice president Keith Gumbinger. Unless we get into a period of very significant economic weakness, we have passed the low-water mark for mortgage rates.
When the Fed cut rates on March 20, mortgage rates had fallen to around 7.07%. They rose to 7.33% by the next cut, on April 18, and to 7.43% by last weeks move.
Mortgage rates are much more in tune with the bond market, experts said, and the incremental increases are an inevitable byproduct of the forward-looking nature of bonds, which are predicting an improving economy.
That Fed cuts should be very positive for the mortgage market seems intuitively obvious, said Mark Zandi, chief economist at Economy.com, but it does not work that way.
Its almost counterintuitive, because as the Fed eases aggressively, the bond market begins to anticipate a much better economy, and therefore long-term yields start to rise and take fixed mortgage rates with them, he said.
Mr. Gumbinger agreed, saying that he expects the economy to improve, an opinion reflected in the yield curve of the 10-year Treasury bond, the benchmark that most closely reflects and predicts mortgage rates. And with the economy slowly but surely getting better, he said, interest rates should rise slightly.
For the second half of the year, most experts agreed that mortgage rates will rise to the 7.5% area, which may cool a four-month heat wave in the refinance market.
After rising to more than 52% of applications for the week that ended May 4, according to the Mortgage Bankers Association, the stream of refinance requests has flattened out and dipped slightly to around 47%.
Were closing in on 7.5% soon, Mr. Zandi said. That will knock the wind out of the refi market and may also take some of the steam out of the purchase market for the remainder of this year.
Ultimately, Mr. Zandi said, the Feds goal of a sound, healthy economy will benefit the housing and mortgage markets.
But in the second half of the year, its actually going to work in the other direction. The next six months are probably going to be tougher than the last six.
Adjustable-rate mortgage lenders, such as Washington Mutual, should benefit for the short term as ARMs come back into fashion.
Mr. Gumbinger said he has seen interest in hybrid ARMs pick up in recent weeks. Fixed-rate products have held 90% of the mortgage market, he said, but that may move in favor of ARMs as the year progresses.
ARM rates are tied more closely to what the Federal Reserve Board does with short-term interest rates, Mr. Zandi said, which means they will go lower. Certainly, if youre an ARM lender, this will help, he added.
Bruce Harting, an analyst for Lehman Brothers, said that his firm expects prepayments will peak in the next couple of months or even weeks as mortgage rates gradually rise.
The most surprising aspect of the year so far, he said, has been the strength of the purchase market, which he said he expects to not only continue, but lift up other parts of the sluggish economy.
Consumers will stay stronger than the bears have been expecting, and a key cornerstone will be the strength of the housing market, he said, citing a steady stream of sales, housing starts, and stability in home prices. Consumer sentiment and behavior will remain stable not up a lot but no panic, hitting the brakes on spending and housing.
