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.
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.
“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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