Although a brief period of calm was observed in the middle of an increasing interest rate storm, it did not boost weekly mortgage demand. It is likely that this will be the beginning of a new trend. The rates are already moving sharply up this week.

The seasonally adjusted index by the Mortgage Bankers Association shows that total mortgage applications increased 2.5% over the week to April 29. The reason was that mortgage rates saw a small decline and the spring market for housing entered its most active period in history.

Average contract interest rates for 30-year fixed rate mortgages (with conforming loan balances of $647,200 or lower) fell to 5.36%, from 5.37%. Points dropped to 0.63, from 0.67 for loans with 20% down payments. The rate was 218 basis point lower in the same week last year. This week, rates rose significantly.

Few borrowers could benefit from refinances. Although refinance applications increased 0.2% in the week, they were 71% less than one year ago. The refinance portion of mortgage activity declined to 33.9% from 35.0% last week. The majority of last year’s mortgage activity came from refinances.

Although mortgage applications for home purchases rose by 4% in the past week, they were down 11% over the previous year. The adjustable rate mortgages offer an attractive interest rate, and are fixed for as long as 10 years. Homebuyers now prefer these rates to be more affordable. While the ARM share of applications remained stable at 9.3%, it is nearly twice as high as that of a year ago.

Joel Kan is an MBA economist and said that the market continues to be challenged by lower housing inventories, rapid price increases, as well affordability issues caused by higher mortgage rates, which force prospective buyers into higher monthly payments.

The rate of interest has risen again this week. This will make it difficult for buyers not to buy the limited options available. Affordability is near record lowsThe supply of houses for sale is not sufficient to reduce competition.