Mortgage demand from homebuyers drops 19% from a year ago, as interest rates surge abruptly higher

Fast-rising interest rates are taking their toll on mortgage demand, as both potential homebuyers and current homeowners head to the sidelines. Total mortgage application volume dropped 4.1% last week compared with the previous week, according to the Mortgage Bankers Association's seasonally adjusted index. Last week's results include a separate adjustment for the Labor Day holiday. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $832,750 or less, increased to 6.97% from 6.85% percent, with points increasing to 0.72 from 0.67, including the origination fee, for loans with a 20% down payment.