This fall is shaping up as a strong season for mortgage bankers, with application rates up more than 60% over year-earlier levels.

The seasonally adjusted index of applications for the week ending Oct. 10 reached 164.5, according to the Mortgage Bankers Association of America, up from 97.1 a year ago.

The good news is expected to continue. David Lereah, chief economist for the trade group, said that more important than the 60% increase over last year is "the fact that in the latest week, applications are up again. ... Maybe next month we'll see a boost in home sales."

The application index is up more than six points in the latest week alone.

Regionally, the Midwest and South were reported as strong spots in application growth.

"We've seen some very nice increases," said Tom Trotter, president of Winston-Salem, N.C.-based Wachovia Mortage Co. "Our volume in September was probably two-plus times our volume in the first three months of this year." The lender has branches in Atlanta, Ga. and Durham, N.C.

The Northeast is also performing better than expected, say several observers. "The independents that survived are doing well," said Marci Shapiro, senior vice president and mortgage division manager for Bank of New York, which is active in warehouse lending.

Mr. Trotter, Ms. Shapiro, and other lenders offer the same explanation for the increase in applications - lower rates.

Thirty-year fixed rates have fallen from 9% at the beginning of 1995 to the current 7.6% level, prompting a boost in home sales activity.

As a result, the fluctuating refinancing index is back up. Seasonally adjusted refinancing figures increased more than 16 points for the week. This represents almost a threefold increase since March, "all due to falling mortgage rates," said Mr. Lereah.

Borrowers choosing to refinance now are most likely "ARM customers, or ones who came in at the peak of rates," said Peter B. Davidson, senior vice president of Marine Midland Bank.

Mortgage lenders are now preparing for a seasonal downturn, but some are hoping to be able to get a boost with new-product offerings.

"People now are trying to do everything," Ms. Shapiro said. "Our most effective customers cater to the secondary market, they're good at schmoozing investors, and they get a broader range of products that they can sell."

Bank of New York has "expanded its horizons," Ms. Shapiro said, to include B-paper and multifamily housing.

Economists are looking for some more rate-cutting activity before winter.

"We're looking for modest moves right now, maybe down to 7.5 or 7.4%," said Mr. Lereah. "But, if some things fall into place, rates could get a heck of a lot lower," he added, citing resolution of the budget deficit as one factor that could cause rates to bottom out.

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