After a short decline in May, mortgage rates have returned to their upward trend. However, the market for housing is still struggling with a shortage of listings. Mortgage demand is continuing to fall as a consequence.

According to the seasonally adjusted index of the Mortgage Bankers Association, the total volume of mortgage applications fell 6.5% last Wednesday. This was the lowest demand in 22 years.

For loans with at least 20% down, the average 30-year fixed-rate interest rate on mortgages has increased from 5.33% to 5.40%.

The week’s refinance demand fell by 6% and was 75% less than one year ago. A large majority of mortgage holders have rates that are significantly lower than current ones. Many people who want to withdraw cash from their home choose second mortgages rather than refinance their original liens.

While rates may be lower than four weeks ago they are high enough that they can still dampen refinance activity. Joel Kan, an MBA economist said that only government refinances experienced a slight rise last week.

The week ended with a decline in mortgage applications to buy a house. They were also 21% less than one year ago.

The persistently low supply of housing and the rise in mortgage rates during the last two months have caused the purchase market to suffer. Kan stated that prospective buyers who are first-time homebuyers have suffered from these increasing affordability issues.

According to another survey from Mortgage News Daily, mortgage rates rose even more to begin this week. After rising in recent months, the rates are now in a more narrow range.

Matthew Graham (chief operating officer of Mortgage News Daily) stated, “There is some possibility that the upper bounds of that range end-up being a ceiling on rates. But that will depend upon inflation.” With Friday’s key inflation report due to be released, volatility continues to exist.