Refinance options have increased in popularity as a method of obtaining more affordable loan terms. Various surveys conducted in recent weeks have shown a spike in refinance applications. Activity in the refinance application market increased 12 percent last week, according to an application volume survey conducted by Mortgage Maxx LLC. Local banks are feeling the increase in refi activity as well. According to a report published online Tuesday by Duluth News Tribune, Duluth, Minn.-based North Shore Mortgage -- a division of North Shore Bank of Commerce -- has seen low interest rates spike refinance activity to about half of total business in recent weeks, from the usual 20 or so percent ratio. Another banker in Duluth also spoke with the Tribune about the local refi boom. “Compared to last year, the requests just in the last half of December are 75 percent higher,” said Lorenda Ingersoll, vice president of lending for the Duluth Teacher’s Credit Union, who attributed the rise to local interest rates hovering between 4 and 5 percents. “It is rate driven," Ingersoll said of the refi surge. "However, the secondary factor is people are nervous about the economy and they want to consolidate debt.” The Federal Reserve said Tuesday it expects to begin operations in early January under a previously-announced program to purchase agency mortgage-backed securities, and that it had selected a group of private investment managers to run the program. “The potential size of the Fed’s purchase program can take down most of the 2009 agency MBS net supply,” analysts Derek Chen and Nicholas Strand at Barclays Capital said late Tuesday evening in a research report. Both Chen and Strand believe the Fed program will drive primary mortgage rates down to 4.5 percent, stimulating further refinancing activity, although a huge refi boom — last seen in 2003 — isn’t likely without looser underwriting. So far the question has been whether these applications turn into actual mortgage loans. And reports out of at least one mortgage banker suggest these applications are not only turning into mortgage loans but they contribute so much extra business that additional staff is required to handle them. Shore Mortgage, a Birmingham, Mich.-based Federal Housing Administration loan provider and mortgage company offering refi and licensed to operate in 26 states, announced Tuesday it would add from 80 to 100 staff members. "Because of Shore's substantial activity in the past year and in anticipation of projected 2009 activity," the company's president announced an initiative to hire between 10 and 20 new employees per months during the next three months, the company said in a press statement. Added positions will include underwriters, processors, closers, post-closing specialists and account executives to handle the influx of business. The news of the growing mortgage company is at least some glimmer of hope in a bleak employment market. Following a slight decrease in initial jobless claims for the week ending Dec. 13, claims last week fell a sharp 94,000, bringing the total seasonally adjusted amount of initial claims to 492,000, the U.S. Department of Labor reported Wednesday.  The drop is shockingly the largest in 16 years. Write to Diana Golobay at diana.golobay@housingwire.com.