Lenders expect a burst of energy in the mortgage industry now that the Federal Reserve has decided to push the federal funds rate down from 6% to 5.75%,

There is sometimes a lag between when the Fed cuts rates and when the impact on home mortgage rates becomes visible. This time, though, many lenders adjusted interest rates the same day as the Fed announcement.

Mark Zandi, chief economist at Regional Financial Associates said lenders are eager to reduce rates the first opportunity they get, because of the competitive environment in the mortgage industry.

Competition is "inducing lenders to lower rates as quickly as possible," Mr. Zandi said. "The market has been sluggish even with the cut in long- term rates over the last six months."

But some lenders will wait to see if the rate drop holds.

"You don't want to lead on the way down," said Keith Gumbinger, an analyst at HSH Associates, a real estate information company in Butler, N.J. The hungrier the lenders, Mr. Gumbinger said, the sooner they will adjust.

He said some lenders he spoke to on the day of the Fed announcement had already begun to cut their rates.

While rates have been low for the past few months, many lenders did not get the business volume they expected in such an environment.

Joe K. Pickett, chairman and chief executive of BancBoston Mortgage Corp., Jacksonville, Fla., and president of the Mortgage Bankers Association of America, said lenders have told him that business has increased over the last few weeks, but it has been spotty with no clear trends.

The decrease in the federal funds rate will translate to lower mortgage interest rates, he said, which in turn should stimulate activity.

Every 1% decline in rates usually makes mortgages affordable for 200,000 more people, so the recent rate cut should translate into about 50,000 people becoming eligible for a home mortgage loan, Mr. Pickett said.

Boatmen's National Mortgage, St. Louis, cut interest rates the day after the Fed announcement. Business there picked up in April, May, and June because of low interest rates, said Cathy Vogt, divisional sales manager. She expects the strong run to continue with the rate drop. But she said a quarter of a point is not enough for business to boom the way it did in 1992 and 1993.

She said rates often drop the day of a rate-cut announcement but recover the next day. She does not see signs that that will happen this time, she said, and predicts rates will hold at this low level.

One lender said he expected the Fed cut and subsequent drop in mortgage rates to perk up the drooping refinance market.

"In the last three weeks, we have seen a decrease in refis, and this will help," said Joe Westley, managing director at Natwest National Mortgage Corp. He said Natwest reduced its rates the day after the Fed announcement.

He said he expected first-time homebuyers and those at the lower end of the market to get a boost because they would be able to afford a home they couldn't handle at higher rates.

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