(Reuters) – Last week, the average U.S. interest rate rose to its highest since 2009. The demand for mortgages grew again for a second week despite increasing costs.

According to the MBA survey, the average fixed rate contract rate for a 30-year mortgage rose to 5.53% from 5.36% one week prior.

As the U.S. Federal Reserve fights an inflation rate that is 40 years high, it has increased the basis point by 242 basis points in 12 months. This represents the largest increase in decades.

Housing market is a rate sensitive sector. Fed policymakers want to reduce its double-digit annual price rise.

It remains to be seen if they are able to cool down the market as much they wish. With record low housing stock and unusually high household saving, price growth is fueled by a tight labor market, increased worker mobility, and extremely tight employment markets, it will be difficult for them not only keep things under control but also increase their market share.

Last week’s mortgage applications increased for the second consecutive week. MBA’s Purchase Composite Index, which measures all mortgage loans for the purchase of single family homes, rose 4.5% last week. This was almost 8 percent lower than one year ago, and still below levels a month earlier.