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While low interest rates have brought a "big rush" in refinancing loan applications, Adam Avery, managing partner of AA Mortgage Group in Frederick, just wishes there was a big rush in closing them.

"Applications and approved loans are two different animals," Avery said in an e-mail to The Gazette. "Although rates have dropped dramatically, only a small percentage of homeowners qualify given the more stringent guidelines for credit score, debt ratio, and LTV [loan-to-value]. … Just because a low rate is offered does not mean an application will be approved and funded."

The national average for a 30-year fixed-rate mortgage last week was 5.16 percent, according to Freddie Mac. That was down from both 5.72 percent a year ago and the previous week, when it was 5.25 percent. January's monthly average of 5.05 percent was the lowest since at least 1971.

Such low rates have greatly fueled interest in refinancing loans at mortgage companies, banks and other lenders throughout Maryland.

Avery called the lower rates a "public relations campaign" by the government and said that the homeowners who truly need refinancing are those who have subprime loans and may be facing foreclosure. Struggling homeowners are now required to pay up to $800 upfront to apply for refinancing with no guarantee that they will even qualify, he said.

President Obama on Wednesday unveiled his $75 billion plan to help struggling homeowners fend off foreclosure through a variety of refinancing options that loosen eligibility requirements for fixed mortgages. Mortgage lenders will be accepting refinance applications under the new terms beginning March 4, after details are announced.

Avery said he was skeptical about the plan's ability to reverse housing market woes and called it "window dressing." He said he thought any new policy should affect homebuyers across the board, not just a particular segment.

"In reality, it is another tax on those that have done the right thing, those that earn, and those that produce," Avery said. "The federal government is primarily responsible for the debacle we find ourselves in. Why would anyone believe they would be the solution to get us out?"

Mlend in Middletown has seen a surge in loan applications starting in December and continuing through January, including from many homeowners seeking refinancing, said loan officer William Poffenbarger.

"The rates are phenomenal and it's been very good for the mortgage industry," Poffenbarger said. "Our business is up — that's the good news."

However, he estimated that in a normal market, the lower rates would have fueled about 30 percent more refinancing applications. The decline in home values has prevented many newer homeowners from taking advantage of the new rates, he said.

Poffenbarger said he is optimistic that Obama's foreclosure plan will serve the lending industry well. He was relieved that homeowners who have been current on their mortgages, but have seen a decline in their home values, will have a better opportunity to refinance under the plan.

"That's a huge benefit," Poffenbarger said Wednesday. "It's going to address all borrowers across the board."

The requirement by bank lenders for higher credit scores — 600 compared with the more common mid-500 scores — may also be making it difficult for homeowners to obtain certain loans for refinancing, said Joe Nomen, operations manager of First Community Mortgage in Landover.

While only one fewer home was sold in Frederick County last month than in January 2008, the average price dropped roughly 7.5 percent.

Last month, when 1,517 homes were on the market, 105 single family homes sold with an average price of $250,000, down from $271,411 a year ago.