Mortgage refinancings are roaring toward a boom as interest rates drop and homeowners emerge from holiday hibernation.

From New York to Seattle, loan officers have phones at both ears-and sometimes even a cellular phone in a pocket-fielding calls from homeowners looking to refinance their mortgages.

"If rates stay as low as they are, then we're in for a major wave of refinancing activity," said Paul Getman, senior economist at Regional Financial Associates, West Chester, Pa. "By this time next week, mortgage bankers' phones ought to be ringing off the hook, if they aren't already."

The average rate quoted on 30-year, fixed-rate loans dropped to 7.09% this week. The rate may go down yet another 10 to 15 basis points in the next few weeks, Mr. Getman said. And if that happens, the industry will experience "one of the largest refinancing waves ever," he added.

Lenders, meanwhile, were reporting a rapid buildup of volume. "It's not the refinance boom yet, but we're sort of poised at the door," said Mitch Nimon, a loan officer at Seattle Mortgage Co.'s Alderwood branch.

Refinancing at the company is brisk, with applications tripling in the last three weeks to an average of three a day at the small Alderwood branch, Mr. Nimon said.

"It's been very, very steady. It's not as busy as I think it will get," Mr. Nimon said. But Seattle-area people, like others throughout the country, are waking up from the quiet holiday period and starting to act on at least one New Year's resolution: refinancing.

In Atlanta, the holiday season probably kept business from really picking up, said Patrick S. Flood, president of HomeBanc Mortgage Corp. But since the new year, call volume for refinancing has almost doubled, he said.

Refinancing activity for HomeBanc also doubled from October to December 1997, jumping from 7% to 14% of HomeBanc's business, and since the beginning of January, HomeBanc has witnessed an additional pickup to 18%, Mr. Flood said.

Before acting, homeowners are doing their homework. "The average person talks to between three and five other companies before they make a decision," said Mr. Nimon at Seattle Mortgage.

Even after researching their options, people can be confronted with confusing fee and rate systems that are not always adequately explained. "The scary thing for the consumer is, it's virtually impossible to know what is happening to you," Mr. Nimon said.

In New York, most of the customers approaching GFI Mortgage Bankers Inc. are looking for a fixed-rate loan because of low rates, said Abraham Eisner, executive vice president.

In December, applications to GFI for refinancing were up by 10%, Eisner said. He estimates that January will bring in 20% to 25% more refinancing applications.

Most customers want to obtain a lower rate for their 30-year mortgage or change the term of their 30-year to a 15-year mortgage, Mr. Eisner said.

With the expectation that business will continue to pick up, GFI is increasing its advertising budget for the first six months of 1998 by 25%, he said. Advertising is less a factor for larger lenders like HomeBanc or Seattle Mortgage, which rely on repeat customers and word of mouth.

Refinancing requires less paperwork than a first mortgage, and this allows for most refinancing business to be conducted on the telephone. And the telephone is ringing for Alexander Gofman, the senior loan officer for GFI.

Mr. Gofman said he is answering close to 150 calls a day about refinancing, from 9 a.m. until 8 p.m.

On Wednesday afternoon, an American Banker reporter called the "800" mortgage information line of Countrywide Credit Industries, Calabasas, Calif., to test how the nation's second-largest home lender was coping with demand.

He heard a recurring message that thanked him for being patient. The message said that "due to historically low interest rates, we've added staff to handle the increased call volume."

Twenty-one minutes later, a home loan expert came on the line.

The reporter asked if the long wait was because of calls concerning refinancing. "Yes-there is a huge backlog of calls right now," a man said. "Do you own a home?"

"No," the reporter replied. Click. The officer hung up to attend to the growing number of homeowners ready to refinance.

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