Mortgage demand plummets 17% following the highest interest rate increase since August.

• The interest rate for 30-year fixed-rate mortgages with conforming loan balances rose from 6.36% to 6.52%.
• Refinance demand fell 26% week to week.
• The number of mortgage applications to purchase a home decreased by 7% during the week.

Last week, mortgage interest rates increased for the third consecutive week, reaching their highest point since August. As a result, both current homeowners and potential buyers decreased their demand, causing a 17% drop in total mortgage application volume, according to the Mortgage Bankers Association's seasonally adjusted index.

The interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 6.52% from 6.36%, with points rising to 0.65 from 0.62 (including the origination fee) for loans with a 20% down payment.

The refinance demand, which is most affected by weekly rate changes, experienced the greatest decline, decreasing by 26% from the previous week. Despite this, it was still 111% higher than the same week a year ago. At that time, rates were 118 basis points higher, so those who purchased a home last year may benefit from refinancing now. The refinance share of applications fell below 50% for the first time in over a month.

The number of mortgage applications for purchasing a home decreased by 7% during the week, but was 7% higher than the same week last year. With more homes available on the market, some buyers are now able to take advantage of the increased supply.

First-time buyers are still in the market despite the increase in rates, as the housing inventory conditions are improving, according to Joel Kan, an MBA economist.

Despite the federal holiday on Monday, mortgage rates have not significantly impacted the start of the week. Although the recent increase in mortgage rates may have slowed the refinancing surge, homebuyers may be more focused on the economy's future shape rather than interest rates today. Some believe they will postpone making a significant purchase until after the November election.