Home Refinancing Spikes as Mortgage Rates Drop

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The U.S. mortgage market saw a brief (and probably temporary) spike in refinance activity earlier this month as homeowners looked to take advantage of a decline in mortgage rates.

See: Stimulus Update: COVID Relief on Mortgages Ends Soon — What Are Your Options?
Find: Should You Refinance Now With the Low Mortgage Rates?

During the week ending Dec. 3, the refinance share of mortgage activity increased to 63.9% of total applications from 59.4% the previous week, according to a Wednesday, Dec. 8 report from the Mortgage Bankers Association.

Overall mortgage applications climbed 2% from a week earlier. The prior week’s numbers were adjusted due to the Thanksgiving holiday. Refinance applications increased 9% from the previous week but were down 37% from the same week a year earlier.

The uptick in activity came as the 30- and 15-year fixed mortgage rates both declined one basis point during the week. It was the first time in a month that mortgage rates moved lower — but the dip didn’t last long. As of Wednesday, Dec. 8, mortgage rates were already up 11 basis points from the prior week, CNBC reported, citing data from Mortgage News Daily. Mortgage rates tend to follow the yield on the 10-year U.S. Treasury.

See: 30-Year Mortgage vs. 15-Year Mortgage — Which Is Best for You?
Find: 10 Common Mortgage Mistakes That Hurt Your Finances

“Borrowers are continuing to act on these opportunities, but if rates trend higher as MBA is forecasting, the window of opportunity to refinance will continue to get smaller,” Joel Kan, MBA’s associate vice president of Economic and Industry Forecasting, said in a press release. “Activity is still close to the highest level since March 2021, which is a positive sign as the year comes to an end.”

He added that home buying activity “continues to be constrained” by a shortage of available homes as well as rising prices and mortgage rates.

You can expect home prices to keep moving higher next year, though at a slower pace. As GOBankingRates recently reported, a 2022 Housing Forecast from Realtor.com projects that median home prices in the United States will climb 2.9% next year — a much lower gain than in 2021, when prices shot up an estimated 12%.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.

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