(Reuters.) – After signals from the Federal Reserve that they would raise rates earlier and more quickly than anticipated, the interest rate for the U.S.’s most well-known type of home loan surged by the largest in the past two years. It has now climbed roughly back to the level it was prior to the coronavirus pandemic.

On Wednesday, the Mortgage Bankers Association reported that its weekly measurement of the average 30-year fixed rate mortgage contract rate jumped to 3.522% from 3.33% the previous week. The increase was the most significant since March 2020. This pushed borrowing costs to historic lows after the Fed cut the benchmark rate.

However, it seems that this era is over. Although mortgage rates have been rising for several months, the big jump in rates this week was due to the publication of minutes from the Fed’s December meeting. This readout indicated that policymakers are prepared to fight rising inflation by raising interest rates, and likely reducing the Fed’s total Treasuries holdings.

The result is that mortgage application volume has dropped, in particular for loan refinances.

Rates at such low levels quickly close the doors to refinance opportunities for many borrowers. Although refinance activity changed little over the week, applications remained at their lowest level in over a month, and conventional refinance applications were at their lowest level since January 2020,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.

Last week’s overall loan volume increase was 1.4%, mainly due to an 2.2% increase of loans for buying a house. However refinancing applications fell 0.1%.