Over the past several months, there has been a significant slowdown in mortgage origination activity, largely due to the fact that consumers seem off-put by the slightly higher interest rates available today. However, most of that downturn has come in the form of consumers being less interested in buying homes, while refinances have recently started to pick up somewhat, and that trend certainly continued through the end of last week.

The total number of mortgage applications filed nationwide in the week ending August 29 rose 0.2 percent on a seasonally adjusted basis, driven entirely by another slight jump in refinance requests specifically, according to the latest Weekly Mortgage Applications Survey data from the Mortgage Bankers Association. That came as a result of a 1 percent increase in refinance applications specifically, while those for purchases tumbled another 2 percent. On an unadjusted basis, in fact, the purchase request volume seen last week was down 12 percent from the same week a year earlier.

As a consequence of these two loan types moving in opposite directions, the share of the market taken up by current owners looking to find more affordable terms improved to 57 percent of all applications, the report said. That's the highest level seen since March, and up from 56 percent a week earlier.

Rates move in opposite directions
What's interesting about this change, though, is that consumers actually saw less affordable terms for refinances, while it became slightly more advantageous to buy, the report said. In all, rates for 15-year fixed mortgages – used mainly in refinances – actually increased to 3.48 percent from the earlier 3.47 percent. Meanwhile, those for 30-year FRMs – favored by new buyers trying to make a purchase – fell to 4.25 percent, down from the previous week's 4.28 percent. The most recent number is the lowest observed since June of last year.

As for adjustable-rate mortgages, it seems that they are growing less popular, with their share of the market declining to 7.8 percent of all applications, the report said. This might be attributable to the sharp increase in rates for such loans, which rose to 3.19 percent from the previous 3.10 percent.

Consumers may not be aware, though, that the current levels of affordability are likely to be the best they'll see for some time to come – or perhaps even ever – and that by this time next year, rates could be in the mid-5 percent range.