Reuters - Many U.S. homeowners continue to take cash out of their homes even as mortgage rates climb and home sales slip, helping to brace the economy, economists said. This year, Americans who refinance their mortgages are expected to draw $257 billion of wealth out of their homes, according to mortgage finance giant Freddie Mac.

That's $13 billion more than the refinancing cash-out seen in 2005 - the hottest year of the recent housing boom.

"I would have thought the home equity extractions would have been much weaker now," said Frank Nothaft, chief economist for the mortgage finance giant.

Consumers' spending of cash extracted from rapidly rising home values has helped fuel the U.S. economy's expansion over the past few years. But the housing sector is cooling, and most analysts expect that support to consumption to falter.

With existing home sales off 7 percent in the second quarter and mortgage rates climbing, some economists see the ongoing refinancing spree as the once-hot housing sector's last gift to the nation's economy.

"That (money) is going right back into the economy in one fashion or another," Nothaft said. "Either it shows up through (home) alterations or shows up in consumption spending."

It is hard to tell exactly where refinancing cash is going, said Nicolas Retsinas, director of Harvard University's Joint Center for Housing Studies, and so gauging the impact of refinance spending "is pretty murky."

Still, he said, "all economist would agree that refinancing home equity loans has boosted spending."

Nothaft said many homeowners are refinancing now before their adjustable rate mortgage resets to a higher level. Those same people are likely to have seen the value of their homes jump in recent years.

Homeowners who are inclined to refinance and have stored-up equity make up a big share of the mortgage cash-outs, he said.

"Homeowners have amassed a huge amount of home equity wealth so that makes it incredibly easy to refinance," he said. "And, hey, if you want another $10 or $20 thousand for other purposes, it is very easy to do."

Still, Nothaft said, the refinancing cash-out spree is probably nearing an end. Freddie Mac expects homeowners to extract $152 billion out of their homes in 2007 and $108 billion in 2008.

Those numbers are still much higher than a decade ago. In 1996, refinancing cash-outs were $17 billion.

Part if the increase is due to a changing view of home mortgages, said Retsinas.

"One of the big changes is that people look at their home as a financial asset," he said. "In another generation, the notion was 'Burn the mortgage.' That phrase is not in fashion anymore."

That new attitude has some benefits for the economy, he said, and cash-outs "are keeping a floor on consumer spending."

Doug Duncan, chief economist of the Mortgage Bankers Association, credits the mortgage industry for making refinancing easier and cheaper in recent years.

Give homeowners with untapped reserves of wealth a simple process to refinance and they will naturally be tempted to cash-out, he said.

"Those two things together are benefiting the economy to some degree," he said.

He also credited the variety of mortgage products that let homeowners delay mortgage payment shock - and so have more money to spend in other sectors of the economy.

Many homeowners who have a teaser interest rate due to expire, for instance, might now refinance with a fixed rate mortgage before interest rates get any higher.

Such a move, Duncan said, "cushions the economy from the full impact of rising interest rates."