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The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50% of all residential mortgage originations. It also tracks the average interest rate for 30-year and 15-year fixed-rate mortgages, as well as the volume of both purchase and refinance applications. The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new- and existing-home purchases.

The latest data is showing that the average rate for a 30-year fixed-rate mortgage (from FHA and conforming GSE data) rose again, climbing 10 basis points to 4.52% since last week while the purchase application volume decreased 3% and the refinance application volume decreased 4% over the same period. Rates have exploded, rising a whopping 106 basis points over the past nine weeks, seemingly directly correlated with the Fed's recent suggestion that it may start to wind down GSE purchases later this year.

Clearly, steadily increasing rates is working to tamp down mortgage application activity. But thus far, the spillover to home sales and price indicators appears minimal. The following chart shows the average interest rate for 30-year and 15-year fixed-rate mortgages since 2006 as well as purchase, refinance, and composite loan volumes.

Source: Reading Rates: MBA Application Survey - July 10, 2013