With the weakening economy continually pushing down the interest rates on home loans, there is a boom in refinance business, reflecting a sudden burst of activity!

Freddie Mac said on Thursday that the yardstick 30-year mortgage plunged to 4.96% in the week ending January 15 - the lowest level ever since the beginning of the mortgage agency's weekly rate survey in 1971. A year back, it averaged 5.69%.

Mortgage lenders are being bogged by queries as interest rates on home loans plunged nearly 1.5 percentage points in the last two months.

The big dive resulted from the recent cuts in interest rates by the Federal Reserve, as a part of its commitment to acquire huge blocks of mortgage-backed securities during the first half of this year.

Existing and potential homeowners are lapping up the opportunity that spells potential savings, or a chance to pay off homes faster - as such there is a rush of applications from homeowners who are excited to refinance. The Mortgage Bankers Association says, since November, there has been a more than fivefold jump in the index that calculates applications for refinance mortgages countrywide.

Brooks Campbell, senior vice president of Vanguard Mortgage Corp, Atlanta, said: "Any time you have rates in the fours percentage points, you're going to have lots of activity. January has just been absolutely fantastic." He also added that refinance applications now comprise nearly 80 percent of his business, from a more or less 20 percent two months back.