A surprisingly brisk rebound is under way in the mortgage industry, and economists believe it could persist until midyear.

The biggest influence is a steady decline in both short-term and long- term mortgage rates since the end of last year. Expectations are that they will stay down because inflation appears to be in check.

Applications for loans to purchase homes have risen steadily and sharply since the end of December. The 11-month slump brought the index compiled by the Mortgage Bankers Association down by about 50%, but the index has now regained almost all the lost ground in just six weeks, getting back to where it was in April.

Applications for refinancings have also climbed steadily this year. They reached their lowest point since the trade group began compiling its index on refinancings in 1990. Now that index has climbed by about 50% and is back about where it was last fall.

Mortgage analysts have predicted a boomlet in refinancings because many holders of adjustable-rate mortgages who refinanced during the boom of 1993 are now experiencing interest shock as their starter rates expire and are shifting into fixed-rate loans. Such shifts have become more viable as the gap between fixed and adjustable rates narrows.

"Home sales in February and March will probably be pretty good. The housing market will slow, but not now," said David Lereah, chief economist at the Mortgage Bankers Association. "If there is a further dip in rates, there will be a surge in application activity, and we are now entering the spring homebuying season. That combination suggests some strength in home sales in the next couple of months."

But then there's the second quarter. "In the second quarter, we will see some of these (sales) numbers come down," said Mr. Lereah.

Mr. Lereah has changed his original forecast for 1995 in light of these indicators. He now predicts 30-year fixed rates will reach 9.1% - rather than the 10% he predicted at the end of 1994. He said rates were now flattening and he expected them to dip in the third quarter of 1995.

"The economy will slow down without a Fed hike because of Mexico," he said. If the Fed does raise rates, it will do so only once, he said.

A senior economist at the Federal National Mortgage Association agrees that the Fed will only raise rates once, if at all, in the near future. If the Fed succeeded in slowing economic growth to 2%, "fixed rates will edge down a little more," Mark Obrinsky said, "and that will offset, to a degree, slower economic growth. If the Fed succeeds, long-term rates won't go up further and may go down." He said that with 2% growth, 1995 "will be a good, if not a great, year for housing in general."

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