A slight dip in mortgage rates and warm weather boosted loan applications for home purchases last week, suggesting consumers are willing to stake a claim on big-ticket items despite a brittle economy.

That strong demand for home mortgages suggests the U.S. economy may be poised for recovery, economists said on Wednesday.

"Some of it (the demand for home loans) is also that the economy is rebounding. There is clear evidence the economy is rebounding," said David Berson, chief economist at Fannie Mae, the nation's largest provider of housing finance.

"Housing is still the most important support for the economy," said Douglas Duncan, chief economist at the Mortgage Bankers Association of America, which tracks demand for home loans each week.

On Wednesday, MBA said its measure of demand for loans to purchase a home, the MBA purchase index, rose 3.8 percent to 340.9 from 328.5 in the week ended Feb. 1. The group's widely watched measure of home loan refinance activity, the MBA refinance index, rose 6.9 percent to 1,884.2 last week.

Each week, the MBA surveys between 20 to 35 firms, among them the top lenders in the U.S. housing industry, to derive its refinance, purchase and market indexes. This weekly survey accounts for more than 40 percent of all applications processed by mortgage lenders.

A relatively mild winter and a slight drop in borrowing costs has helped support demand for homes in a season that traditionally sees a slowdown in demand.

"Applications are running at levels higher than expected. Part of it is because we had a very mild winter. That has aided and abetted the sales market," said Duncan.

"The warm winter certainly has an impact on people looking for homes. But it should have bigger impact on housing construction," said Berson.

Duncan added that a decline in 30-year mortgage rates to 6.9 percent may have induced demand. "When rates go below 7 percent, you get this jump. It seems like there is a psychological barrier at 7 percent," he said.

To date this year, 30-year mortgage rates have ranged between 6.8 percent and 7.10 percent. Last year, long-term rates ranged between 6.4 percent and 7.30 percent.

"Mortgage rates are up from historical lows, but they are still low historically," said Berson.

Early this month, the National Association of Realtors said housing affordability in the last four months of 2001 rose to highs not seen in three decades, in part because of low rates.

Appreciation in home property values has ensured that home owners can trade up to a pricier property or cash in on the increased value of their homes by refinancing their mortgage loans. Refinancings accounted for 49.4 percent of last week's activity.

Last year, at the height of the refinance boom, applications to refinance loans accounted for 75 percent of mortgage banker business volume.

"There are still a lot of cash-out refinancings going on. The proportion of cash-out refinancings is still high," said Duncan.

Some of the cash taken out via refinancing supported consumer spending last year and has increasingly been used as a way for families to buttress their balance sheets in case of job loss.