At the same time, would-be borrowers are confused and even angry that, in fact, the recent short-term interest rate cut by the Federal Reserve has had little or no effect on reducing long-term mortgage rates. For what most borrowers don't understand, say mortgage- industry analysts, is that immediate moves by the Fed are far removed from mortgage rates — which already were, and still are, near historic lows.

"The phones have been ringing off the hook," said James Fresella, president of Apollo Financial Services, a small, three-agent mortgage lender in Riverdale, N.J. "When the Fed cuts rates, we're inundated with anywhere from 30 to 40 calls a day; and normally it would be two to three a day."

Then come the strained conversations.

"They're yelling, `What do you mean? Are you crazy? Why aren't mortgage rates coming down?' " Mr. Fresella said. "It's very frustrating. And you have to be courteous enough to explain to them that even though the Fed cuts rates, it doesn't affect mortgages directly."

The picture is little different, just enlarged, at the 60-agent New York Mortgage Company in Manhattan. "Everybody's loan-processing pipelines are bursting," said Steven Schnall, the company president. "It's been happening all year."

"The problem for lenders is that, unlike in a purchase transaction where the borrower must immediately go to closing," Mr. Schnall said, "a lot of refinancers have been sitting on the fence, waiting to lock in, because of rumors that the Fed was going to cut rates."

"There were certain people who were very happy with a 6.875 percent rate a few weeks ago," he continued, "and those were the people who heard the talk that the Fed was going to cut rates. So they said, `I'll wait.' And they were surprised that the Fed cut had almost no effect."

On April 17, the day before the Fed announced its latest half-point rate cut, interest on 30-year fixed-rate mortgages averaged 7.36 percent. At the start of business last Thursday, the average was 7.32 percent.

Since the beginning of the year, said Douglas Duncan, the senior economist for the Mortgage Bankers Association of America, "more than 50 percent of all mortgage applications in the nation have been for the purpose of refinancing."

"People are converting adjustable-rate mortgages to fixed-rate mortgages," Mr. Duncan said, as they try to lock in to current favorable rates. "People are shortening their terms; going to a 15- or 20-year mortgage, rather than refinancing a 30-year. They are taking cash out of the equity they've built up in their homes to pay off personal debt. Or they are just looking to lower their monthly payments."

For several months, Francisco Cedeno has been weighing whether to refinance the 30-year fixed-rate mortgage on the home he bought in Union, N.J., a year ago. He has been discussing it, increasingly frequently, with Mr. Fresella at the Apollo mortgage firm.

"I've been calling Jim for the last two months," Mr. Cedeno said. "The last month it was kind of weekly, and now it's come to every two, three days, right after the last Fed cut."

Mr. Cedeno, a hedge fund analyst, and his wife, Maritza, have two children, Angelica, 4, and Steven, 1. "We bought about a year ago, when interest rates were peaking," Mr. Cedeno said. The price for the four-bedroom, extended Cape was $175,000, of which $160,000 was financed at 8.25 percent.

"I see the Fed dropping rates, the economy slowing down, and I'm thinking that's a good thing for refinancing," Mr. Cedeno said. "Then I found out that that only affects short-term rates, and mortgage rates are still going up."

The Cedenos hope to lower their monthly payments so they can renovate the driveway, the front steps, the kitchen. "Some of the work I'm doing myself, with some relatives," Mr. Cedeno said. "I can't really make a long commitment with a contractor."

"When you try to make a move, it's like the rates know you're coming, and they go up," he said. "I'm frustrated because, well, I don't know, some days they're down, some days up — nothing concrete."

Besides the average of 7.36 percent for 30- year fixed-rate mortgages on April 17 — the day before the Fed's last rate cut — the average for 15-year fixed-rate mortgages that day was 6.92 percent, and for one-year adjustable-rate mortgages it was 6.43 percent for the first year of the mortgage. (Adjustable-rate mortgages, or ARM's, initially offer low rates for a set number of years — as a sort of enticement — after which the rates may rise steeply.)

By Thursday morning, the average for 30- year fixed-rate mortgages stood at 7.32 percent, four basis points below the rate on April 17 (each percentage point equals 100 basis points); the 15-year fixed rate was 6.82, down 10 basis points, and one-year adjustable rates averaged 6.21 percent, 22 basis points below the rate on the day before the Fed cut.

"There is a great expectation that mortgage rates will immediately move in the same direction and by the same magnitude as changes in Fed monetary policy," said David W. Berson, the chief economist for Fannie Mae , the federally chartered home financing agency. "As a result, when the Fed cut the federal funds rate by 50 basis points on April 18, the popular expectation was that long-term mortgage rates would immediately decline by the same amount."

"In fact," Dr. Berson said, "mortgage rates had already incorporated the expectation of this Fed easing of the federal funds rate into the level of long-term mortgage rates."

ONE analyst, Keith Gumbinger of HSH Associates, a mortgage research company in Butler, N.J., tweaked the media for its coverage of the Fed and mortgage rates. "The airwaves and news pages were full of discussion of how the Fed move will bring lower borrowing costs to home buyers, refinancers, consumer borrowers," Mr. Gumbinger said. "But painting the Fed move as an across-the-board rate cut for everybody left many potential borrowers with a bad taste in their mouths when their brokers told them, `Rates aren't going down; they're actually rising right now.' " Long-term mortgage rates had actually spiked up a bit in the days after the Fed cut.

"Follow-up pieces may more completely evaluate what happens, what it means," Mr. Gumbinger said, "but nothing grabs a consumer like a 40-point headline."

What most borrowers are unaware of is that mortgage rates are not set by the Fed; they are, instead, closely tied to long-term bond yields. A significant portion of the bond market consists of bundles of mortgage- backed securities, whose yields tend to rise and fall along with long-term Treasury bonds — not with the short-term rates that the Fed directly influences. And this year long-term rates have not fallen very much, a fact that has surprised some bond market analysts.

Sometimes, when the Fed raises short- term interest rates because it wants to pre- empt an increase in inflation, long-term mortgage rates may rise in order to make the bundles of mortgages sold to investors attractive to buyers fearful of future inflation. At other times, when the Fed lowers short-term interest rates in order to stimulate the economy, mortgage rates may not drop as steeply as the cut made by the Fed, and may even rise because they have already declined in anticipation that the Fed would be easing rates.

The latter scenario is precisely what has happened in recent months, said Mr. Gumbinger, the analyst at HSH Associates.

On April 18, the Federal Reserve cut short-term interest rates — specifically the federal funds rate, which is the overnight lending rate between banks, and the discount rate, which is the interest rate the Fed charges banks to borrow from it — by 0.5 percent, or 50 basis points. "The Fed stated that it believed the economy is soft and that the softness will continue," Mr. Gumbinger said.

"What does it mean to Mr. and Mrs. Mortgage Borrower? Unfortunately, very little," Mr. Gumbinger continued, "because mortgage interest rates did most of their declining last year, long before the Fed got involved, and remain near historic lows." The low for the last 10 years — in fact, the last 33 years — was 6.68 percent in October 1998.

From mid-May of 2000 until early January of this year, the average interest on 30- year fixed-rate mortgages declined from 8.82 percent to 7.34 percent. Surprisingly, the long decline was sparked by a half-point increase in the federal funds rate to 6.5 percent on May 16, 2000, which, coupled with sharply rising energy prices, caused a marked slowdown in economic growth.

"The high cost of short-term borrowing helped slow the economy appreciably, which was the Fed's intent because growth had been running so strong that the Fed was afraid inflation might gain a toehold," Mr. Gumbinger said. "However, as those higher short-term interest rates began to do their work, the higher energy prices kicked in, causing a more pronounced slowing in the economy than the Fed anticipated."

"Yet, even as the economy slowed, the Fed held those short-term rates at a very high level," Mr. Gumbinger continued. "And long-term mortgage rates declined along with the diminishing growth in the economy." Because demand for credit is very low during a slowdown and inflation pressures are usually near their low point, lenders lower rates to attract borrowers.

"That brought us up to January of this year." Mr. Gumbinger said. "The Fed responded to — what's a nice word for it? — the unexpected slowdown by trimming rates one half of a percentage point on Jan. 3. And because the Federal Reserve has shown its willingness to address the economic slowdown, thereby increasing the possibility of renewed growth just down the road, mortgage interest rates stopped declining, and have since been bouncing in a narrow range."

SINCE the Fed's first interest rate cut on Jan. 3, 30-year fixed mortgage interest rates have fluctuated between a high of 7.34 percent during the week ended Jan. 26 and a low of 7.07 percent the week of March 23. "So on Jan. 3," Mr. Gumbinger said, "there was that half-point cut by the Fed; then, on Jan. 31, there was another; on March 20, another, and on April 18, the most recent one. But despite those cuts totaling 200 basis points, mortgage rates have moved in a range of only 27 basis points."

Dr. Berson at Fannie Mae concurs with that scenario, adding that even another Fed cut is unlikely to further reduce mortgage rates. "It's likely that another 50 basis points of Fed easing is already incorporated into the current level of mortgage rates," he said. "The economy would have to weaken so much more than currently anticipated that the Fed would have to go beyond the 50 basis points already anticipated for the next several months in order for long-term mortgage rates to decline further."

Mr. Duncan at the Mortgage Bankers Association said, however, that he "would disagree slightly that a full 50 basis points are already incorporated into interest rates in mortgage markets."

"Certainly 25 basis points are already in the market," he said, "but there is some potential for lowering mortgage interest rates if the Fed goes another 50 basis points."

"Still," he added, "the bottom line for mortgage consumers is that there is not much room for a decline in rates."

One year after buying his two-bedroom duplex town house condominium on West 89th Street, complete with a fireplace and a garden in the back — "not many New Yorkers can say they have their own tree" — Steven Savad is sitting on the mortgage refinance fence.

Mr. Savad, chief financial officer of Restaurant.com, an Internet company that creates Web sites for restaurants, and his wife, Sherri, an advertising planner, paid just under $1 million for their home. "You're sort of a victim of whatever the rates are at the time you buy," he said.

The Savads financed about half the purchase price with an adjustable-rate mortgage in which the rate is fixed for the first five years, then becomes an adjustable in which rates can change annually for the remainder of the 30-year term. The rate for the loan, called a 5-1 ARM, was 8.125 percent, carrying a monthly payment of about $4,000.

While he has "no regrets about the mortgage," Mr. Savad is taking a hard look at the new realities.

"If I simply wanted to refinance with the same vehicle that I have — a new 5-1 ARM — I could do it and reduce my monthly payment by roughly 15 percent," Mr. Savad said. "But the rate wouldn't be much different on a 10-year fixed because I've also seen them at around 7 percent."

The Savads, their interest piqued by news coverage of the Fed rate cuts, are thick into the process. "In this day and age, with the way news is broadcast, you almost can't help but breathe it," Mr. Savad said.

"I'm going to lock in, that's for sure," he said. "The question is when, exactly — likely very soon."