Mortgage refinancing on the rise as interest rates fall

More homeowners are now able to refinance their mortgages thanks to the lower interest rates.

U.S. mortgage rates are at their lowest level in well over a year, leading to an increase in the number of refinance loans. According to Ellie Mae, these loans grew in each of the four months leading up to October. Over the same period, new purchase loans have fallen, although they still make up about 60 percent of the mortgage market.

Refinance loans fell as low as 32 percent in July before beginning their current ascent. The proportion of mortgage loans that were refinances surpassed 70 percent in January 2013, but the recovery of the housing market soon reversed that trend. By July of last year, purchase loans were once again the majority.

Mortgage rates are currently at around 3.8 percent on average and, according to Freddie Mac's criteria, homeowners can refinance when their loan rates are 1.5 percentage points higher than that. Given these low rates, millions of Americans are now eligible for an adjustment.

Ellie Mae also released other notable data as part of its October report. The average credit score is 683 for an approved Federal Housing Administration (FHA) loan and 754 for the overall market. Those numbers are just nine and five points lower than a year ago, respectively, despite the easing of lending standards. FHA loans made up 19 percent of the market, while 11 percent were VA loans. The clearest evidence of the looser standards is that a record 66.1 percent of all applications were approved.

Loan management software makes it easy for lenders to track payments and keep close tabs on all their operations, irrespective of the current state of the mortgage market.