Higher interest rates this month may be spooking borrowers. Total mortgage applications for refinancings and home purchases dropped 6 percent on a seasonally adjusted basis for the week ending Oct. 7, the Mortgage Bankers Association reported Wednesday.

The 30-year fixed-rate mortgage rose to 3.68 percent last week, up from 3.62 percent the week prior, the MBA reports.

"As incoming economic data reassured investors regarding U.S. growth, and financial markets returned to viewing a December Fed hike as increasingly likely, mortgage rates rose to their highest level in a month last week," says Michael Fratantoni, the MBA’s chief economist. "Total and refinance application volume dropped to their lowest levels since June as a result."

Refinancings have been dropping for several weeks now, with an 8 percent drop last week. Mortgage applications for home purchases, on the other hand, posted a smaller drop at 3 percent week over week. Purchase applications are still 27 percent higher than a year ago.

Source: “Mortgage Applications Down 6% as Rising Rates Take a Toll,” CNBC (Oct. 12, 2016)