A brief surge in mortgage refinance demand turned out to be short-lived as interest rates continue to climb. The trend will likely accelerate after the Federal Reserve announced on Wednesday that it anticipates increasing interest rates three times in 2022.

Federal Reserve Chair Jerome Powell cited record inflation increases due to supply chain challenges brought on by the pandemic and an erratic labor market.

“Employers are having difficulties filling job openings, and wages are rising at their fastest pace in many years," Powell told reporters.

Last week’s applications to refinance a home loan decreased 6% and were 41% lower than the same week one year ago, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending Dec. 10.

The refinance share of mortgage activity decreased to 63.3% of total applications from 63.9% the previous week.

In December 2020, rates were about 45 basis points lower. Experts say at least a drop of 50 basis points is needed to make a refinance worth it.

“Fewer homeowners have a strong incentive to refinance at current rates,” said Joel Kan, MBA's associate vice president of economic and industry forecasting, in the weekly survey.

Kan said applications to refinance fell over the week, despite the 30-year fixed-rate remaining at 3.3%. With rates more than 40 basis points higher than last year, applications were down 41% on an annual basis.

CNBC reported on Wednesday that uncertainty over the Omicron variant caused rates to drop for about four days last week, causing a refinance surge. But they rose sharply higher again, only to scale back down.

Homebuyers also took a step back. Applications for a mortgage to purchase a home increased just 1% week to week and were 9% lower than the same week one year ago.

Kan said even though housing demand remains strong as 2021 closes out, supply is weak and home prices are continuing to rise out of buyers’ reach.