Effective rates for home loan products tracked by the Mortgage Bankers Association shot up last week, sending application activity into a nosedive. The MBA's Market Composite Index for the week ending Oct. 11 fell by 17%, after a smaller slide in the prior period. 

The average contract interest rate for a 30-year fixed-rate loan jumped 16 basis points to 6.52% last week, weakening demand for refinances that only weeks ago was thriving. The MBA's Refi Index fell 26% weekly, against a Purchase Index falling 7% over the same timeframe.

Compared to the same time last year, when a 30-year FRM was well above 7%, purchase activity is up 7%. The Refi Index also remains 111% higher than a year ago. 

"Demand is holding up to an extent for prospective first-time buyers," said Joel Kan, the MBA's vice president and deputy chief economist, in a press release. 

Kan cited inventory which has relatively improved, which limited the damage to Federal Housing Administration loan activity. FHA purchase applications saw the lowest weekly drop among loan types, falling just 0.4% week-over-week. 

Applications for other government-backed loans fell by double digits on a weekly basis, with only Department of Veterans Affairs purchase application activity declining by single digits at minus 4.8%.

The average contract interest rate for 30-year FHA loans rose 20 basis points to 6.42% last week. Both jumbo loan and 15-year FRM rates increased by double digits to 6.76% and 5.94%, respectively.