Mortgage purchase application volume has been slipping of late, as interest rates moved higher. Volume is down nearly 5 percent from four weeks ago, but it is still 18 percent higher than a year ago.
Read MoreWeekly mortgage applications rise 0.1% as average loan size shrinks
The average loan size on purchase applications has been shrinking steadily, indicating more first-time homebuyers may be coming back to the market. The Realtors, however, reported just 30 percent of June sales were from first-time buyers, well below the historical norm of 40 percent or higher.
The bankers association is also pointing to a slightly looser grip on underwriting.
"More sales are being financed, and more applications are being approved. And we expect that this trend will continue into 2016 and beyond, as the broader economy and job market continue to improve," the association economists said.
Average FICO credit scores are still abnormally high, but some lenders are starting to bring new products, like interest-only loans back to the market. They had been as much as 10 percent of new mortgages in 2005 but are now barely 0.3 percent of new loans.
Read MoreInterest-only mortgages: They're baaack
Freddie Mac recently loosened restrictions in several areas of its mortgage underwriting, including how it factors student loan debt into the debt-to-income calculation.
"That's a big deal, given that the reason often cited for millennials not buying in bigger numbers is student loan debt, so if less of those payments have to be counted against them, then more millennials will qualify to purchase a home," said Craig Strent, CEO of Maryland-based Apex Home Loans.