LOW EXPECTATIONS HOME LOAN RATES MAY STAY UNDER 6%.

Byline: Gregory J. Wilcox Staff Writer

Home loan rates should remain in buyers' comfort zone - under 6 percent - the rest of this year and through much of 2005, economists projected Thursday.

The low rates, which remain near all-time lows, have pushed refinancings to their highest level in five months and purchases up 18 percent from this time a year ago.

The benchmark 30-year rate averaged 5.72 percent for the week ending Thursday, said mortgage giant Freddie Mac. That's up from 5.70 percent in the prior survey and under the 5.98 percent average for the like period a year ago.

It's happening because the economy, while improved, is still wobbling around.

``Economic growth, while we have it, has not been as vibrant as we thought six months ago,'' said Frank Nothaft, Freddie Mac vice president and chief economist.

Growth of 4 percent or better was forecast for this year, but the second quarter came in at 3.3 percent. Basically, if the economy does better, then anticipated rates rise. If it matches the trend line or falls below it, rates stabilize or fall.

Nothaft and others now think the benchmark rate will remain under 6 percent the rest of this year and maybe move up only between a quarter percentage point to half percentage point over the next 12 months to 16 months.

Low rates are keeping the housing market vibrant, Nothaft said.

Freddie Mac's survey follows by a day an analysis by the Mortgage Bankers Association that showed rates averaging 5.64 percent for the week ending Sept. 24. That's down from 5.66 percent a week earlier.

Refinance activity accounted for 45.9 percent of all mortgages in the latest survey, up from 44.5 percent a week earlier.

Doug Duncan, the association's chief economist, said that the direction rates have taken is a surprise.

``That was not in our forecast for the year, and I don't know of anyone that had rates forecast in this range,'' Duncan said. ``We all missed the rate story to some degree, largely because most everybody thought the economy would be picking up faster, especially with regard to employment.''

This has been an extended run of good fortune for Calabasas-based Countrywide Home Loans.

``If I can lock in these rates for the rest of this year and most of next year that would be fantastic,'' said Doug Perry, the company's senior vice president.

And even if rates do move up to the 6.25 percent to 6.50 percent range in 12 to 14 months, they will still be considered low by historical standards. ``I think we're seeing some real volatility, and volatility tends to indicate the top of the bottom of the market. I don't think we're at the top, so we're probably testing some lows,'' he said.

Gregory J. Wilcox, [phone]

greg.wilcox(at)dailynews.com