Mortgage rates have been running at historically low levels for the last few months and the mortgage industry is seeing a huge upswing in the number of refinance requests from homeowners who are eager to save whatever, and wherever, they can.

According to a recent article in the Wall Street Journal, information from the Mortgage Bankers Association indicates that mortgage refinance applications are running three times the level that they were twelve months ago. With 30-year fixed rates averaging around 4-3/4%, it is easy to see why homeowners want to take advantage of a unique opportunity.

Banks and mortgage lenders are reaping the benefits of the increased activity, some even adding additional staff to handle the volume, as Wells Fargo & Company did recently.  They reported that they wrote the highest amount of mortgage loans in the first quarter - more than $100 billion - than in any time since 2003.

But apparently there is no such thing as an ‘easy’ loan anymore.  Mortgage lenders that I’ve spoken with recently indicate that the process can be challenging, as banks scrutinize each application to the most minute detail, regardless of an applicant’s credit score.  And there is essentially no such thing as a ‘drive by’ appraisal anymore.  Some homeowners are also finding higher fees and more paperwork than were the case prior to the credit crunch, while others are discovering that their home values have dropped to a point where they can not refinance.

With the volume of refinancing and the fact that homeowners were going to be saving a good chunk of money, I assumed that the economy might see a boost as disposable income increases.  But according to JPMorganChase economist Michael Feroli, the benefit to the economy is expected to be small.  The numbers tell the story: if $1.5 trillion of mortgages are refinanced by an average of 1%, it amounts to about $15 billion per year, a drop in the bucket when compared to overall consumer spending.  Some economists expect homeowners to sock most of the money away, in light of the uncertainty about job security and the overall economy. Of course, increasing the savings rate isn’t necessarily a bad thing, either.  Long term that is a healthy trend.  And if the monthly savings helps some of these homeowners to avert foreclosure, that’s a good thing too.