Mortgage interest rates dropped to an average rate of 5.04 percent, not including fees, during the week ending Dec. 19, 2008, according to the Mortgage Bankers Association (MBA). This caused a pickup in the mortgage refinance activity resulting in a 62.6 percent increase in the MBA Refinance Index from the previous week.

How many of these applications result in successful refinances remains to be seen. Lenders’ qualifying criteria have tightened. The lowest interest rates are reserved for homeowners who have sufficient equity in their homes and who have high credit scores — usually above 720. Lenders are also stricter on the borrower’s overall debt-to-income ratio, but this varies from lender to lender.

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