Analysis reports on refinancing by Freddie Mac have shown that during the fourth quarter of 2013, the refinance share of applications averaged 56% in its monthly refinance survey. But its economists foresee a drop in refinances to 38% this year.

Many homeowners who refinanced through Freddie Mac in 2013 have been choosing fixed rate mortgages by keeping the same mortgage balance and choosing shorter-term loans to build quick equity. Furthermore, they are still receiving many advantages, with more percentage points off their rates.

Although 39% of those who refinanced during the fourth quarter of 2013 shortened the terms of their loans compared to 37% in the third quarter of last year, economists are expecting refinancing to represent only 38% of all originations in 2014 as the growing purchase market surfaces.

Freddie Mac saw a diminishing pool of prospective homebuyers and rising mortgage rates during the second half of 2013. With mortgage rates expected to hit 5% by the end of the year, fewer mortgage holders will refinance, while more people will look to take out a mortgage to buy a house before mortgage rates go up any further.