RJ and Makay

With mortgage rates at their lowest since the end of January, mortgage applications were up last week as borrowers looked to refinance. The Mortgage Bankers Association (MBA) index of loan applications rose 13% in the week ended February 18 after dropping the prior week to its lowest point since November 2008. Meanwhile, the association's refinancing measure jumped 18% and its purchase gauge rose 5.1%.

“Refinancing is more sensitive [than purchases] to fluctuations in rates,” observes Paul Dales, a senior economist at Capital Economics Ltd. However, Dales says he expects refinancing to remain soft, with sales at historically depressed levels, for two or three years.

In an important sign that the economy is beginning to expand, companies are increasingly seeking loans and banks are more frequently saying "Yes."

In the last three months of 2010, for example, U.S. Bancorp wrote $8 billion in new business loans — its largest volume in two years — and JPMorgan Chase added 400 midsize companies to its client list. According to the Federal Reserve, bank loans overall grew for the first time in two years. "Companies are talking about growth in ways they haven't for three years," relates Perry Pelos, head of Wells Fargo's commercial banking unit.