“Our OBMMI daily interest rate tracker showed average offerings reaching as high as 3.36% in the week leading up to Thanksgiving before settling,” Happ added.

The drop was also driven by a 9.4% decline in rate/term refinance originations. As a result, the overall refi share of the market hovered at 45%, down by nearly 65% from Q3 2020 and the lowest since June. Both purchase and cash-out lock volumes fell as well, down by 3.9% and 2.5%, respectively.

Despite the downturn, there are still around 11 million high-quality refinance candidates who could cut their first liens by at least 0.75%.  The average loan amount also climbed another $7,000 to a new high of $337,000 in November.

“While the rate of home price growth has slowed, it is still historically quite robust,” Happ said. “As a result, we continue to see non-conforming jumbo loan products gain market share at the expense of agency volumes. With higher conforming loan limits announced by the FHFA taking effect at the start of 2022, it will be interesting to see to what degree this trend persists.”