A rational borrower, of course, would look at the preceding chart and conclude that rates have bottomed; therefore, the time to refinance at near-historic lows is now. But look at the rapid fall of the top line of the chart. Refi applications have dropped like a rock during a period of time in which rates have risen a paltry 1/10 of 1%. This suggests that borrowers expect QE3 and a continuation of ZIRP, which may or may not happen. The take away from this? Like a Pavlovian dog, the American consumer has been conditioned to make major financial decisions not based upon the health of the private sector economy (as he had for more than 2 centuries), but rather based upon the actions of Washington and the nation's central bank. This paradigm shift is characteristic of consumer activity in a centrally-planned economy.
Update: Economic Policy Journal is reporting that Bernanke himself refinanced his mortgage last year. If that's not indicative that rates aren't going anywhere but up, I don't know what is.