Many in the mortgage industry have predicted a slowdown in refinancings this year, but the latest statistics show refis on the rise.

The Mortgage Bankers Association refinance index finished the week of Jan. 29 at 1,741.7, its highest level since Dec. 18. Refinancing activity accounted for 53.4% of applications.

The index rose despite increases in mortgage interest rates. The average rate on a 30-year fixed loan for 80% of value hit 6.75%. One-year adjustables inched up to 6.18%.

"There's still quite a bit of demand for refinances," said David A. Sayers, vice president of retail banking for Katahdin Trust Co. in Patten, Maine.

But Dale Westhoff of Bear, Stearns & Co. said the recent rise in the index-from 1,500 to 1,700-is not very significant, considering that it was above 4,000 back in October.

"We expect it to bounce around between 1,500 to 2,000 range if rates stay at these levels," said Mr. Westhoff, the firm's senior managing director for mortgage research.

Mr. Sayers and other lenders said they expect slowing of the economy in the second half, which might lead to a further Fed rate cut and another surge of refinancing business.

Others said refinancings are beginning to decline, despite what the index seems to indicate.

HomeBanc Mortgage Corp.'s refinancing business has dropped by 30% from a year ago, reflecting "the beginning of the end" of the refinance boom, said D.C. Aiken, a vice president at the Atlanta lender.

Mr. Aiken predicts the economy will slow and rates will hover between 6.5% and 7%. He said HomeBanc does not change its staffing for "peaks and valleys" in loan production.

Abraham Eisner, executive vice president of GFI Mortgage Bankers Inc., predicted refis would make up 30% of its production, as they usually do, through the first half. He too said the economy will probably slow down and the Fed will probably cut rates slightly, boosting refi business again.

On Wall Street, researchers suggested that the uptick in the refinancing index may have been an anomaly.

The index was "artificially low" during the holidays, said Arthur Q. Frank, director of fixed income research for Nomura Securities International. "We should not have been down to the 1,500 level."

But "investors are still nervous about prepayments," Mr. Westhoff said, because "a little volatility could trigger a surge."

"We're still in striking distance of another refi wave if rates rally," he said. The effective no-point mortgage rate is now at 6.90%, and would have to drop to 6.60% to trigger a surge in applications, he said.

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