Last week, applications for refinancing home mortgages increased 88% according to Mortgage Bankers Association. Homeowners were quick to take advantage of last week’s drop in interest rates following the government’s takeover of Fannie Mae and Freddie Mac, but rates are rising again on investor fears about the eroding conditions in financial markets.

Refinances accounted for nearly 52 percent of all application activity, up from 36 percent the previous week, the trade group said.

The volume of purchase applications also edged up last week by 5 percent.

But while the number of applications surged last week, the approval will likely be not so optimistic as appraisals for many homes are closing in or moving below the amount of the existing mortgages.