One would think that everyone who qualified to refinance their homes would have already done so with interest rates being so long for so many months.

Not so fast. Refinance activity just this last week increased +3.8% over the week before, according to the Mortgage Bankers Association (MBA). In fact, refinance applications were up a whopping +9% for the week and an eye popping +148% compared with one year ago. In terms of the total share of mortgage activity, refinance activity increased to 62.4% from 59.0% of total applications.

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According to the real estate analytics firm Black Knight, refinance volume was 17% of all total activity within the market for 2019. Additionally, there was a growing share of borrowers who were cash-out refinances, a practice not much done in 2018.

Joel Kan, association vice president of economic and industry with the MBA, said, “The 30-year fixed mortgage rate remained under 4% for the fourth straight week, and rates for FHA loans declined close to their lowest level of the year. The decrease in FHA rates led to a +27% jump in refinance applications for these loans, and their share of refinance activity – at 14% – was the highest since 2016.”

Purchase applications for the week of December2 declined slightly by -0.4% but were +5% higher than one year ago, according to the MBA.

Economically, things look positive for the housing market EXCEPT within the for-sale segment of the market…the supply shortage is worsening, particularly in the low tier ($250,000 and under) of the market where demand is the highest.

In terms of the Fed’s recent “no change” announcement, the Fed’s responsiveness to the December 15 deadline concerning additional US tariffs on Chinese goods will get more attention. According to writing by Mathew Graham, CEO of Mortgage News Daily, “…a delay or cancellation would be bad for rates…waking up on Monday morning of next week to find the tariff hikes having been implemented would, I think, mean that rates would likely benefit (ie. move lower).”

Thanks to CNBC’s Diana Olick for source data.

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