In June the average rate on the 30-year fixed shot over 6% briefly, and that was enough to turn the once-hot housing market on its heels. Rates pulled back in July and August, but the damage was already done. Now rates are heading past 6% yet again, causing already beleaguered mortgage demand to fall even further.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.94% last week from 5.80% the previous week, for loans with a 20% down payment, according to the Mortgage Bankers Association. That was the weekly average, but there were a few days when the rate rose above 6% on another survey from Mortgage News Daily.

“Mortgage rates moved higher over the course of last week as markets continued to re-assess the prospects for the economy and the path of monetary policy, with expectations for short-term rates to move and stay higher for longer,” said Mike Fratantoni, MBA senior vice president and chief economist.

As a result, mortgage applications to refinance a home loan fell another 1% for the week and were 83% lower than the same week one year ago. Mortgage rates were just below 3% one year ago and were at record lows for the better part of 2021, so there are very few people now who have not already refinanced to a much lower rate than is available today.

Mortgage applications to purchase a home dropped 1% for the week and were 23% lower than the same week one year ago. Given today’s higher rates, a person buying a $400,000 home would pay close to $700 more per month than they did a year ago.

“Recent economic data will likely prevent any significant decline in mortgage rates in the near term, but the strong job market depicted in the August data should support housing demand,” said Fratantoni, adding, “There is no sign of a rebound in purchase applications yet, but the robust job market and an increase in housing inventories should lead to an eventual increase in purchase activity.”

Mortgage rates shot even higher to start this week, as investors await a slew of speeches by Federal Reserve members that could give more insight into how large the next rate hike might be. Higher mortgage rates are already cooling home prices, but given how far they rose in the past few years, it will likely take significantly more cooling before affordability fully recovers.