Rates on the most popular type of U.S. home loan surged after the Federal Reserve announced it was raising interest rates b)< 75 basis points in an attempt to slow the economy and quell inflation, which is al 40-year-highs.

“These higher (mortgage) rates are the result of a shift in expectations about in- flation and the course of monetary policy,” said Sam Khater, Freddie Mac’s chief economist. “Higher mortgage rates will lead to moderation from the blistering pace of housing activity that we have experienced coming out of the pandemic, ultimately resulting in a more balanced housing market.”

Mortgage rates have risen sharply since this time last year, when the average rate on a 30-year fixed-rate mortgage was 2.93percent.

Still, more homebuyers sought properties compared to a week earlier, perhaps signaling a flurry of activity before aggressive tightening by the Federal Reserve further impacts the sector, the Mortgage Bankers Association (MBA) said on Wednesday.

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The MBA’s Purchase Composite Index, which covers mortgage loan applications for single family homes, increased 8.1 percent from a week ago. The MBA’s Refinance Index rose 3.7 percent.

Purchase applications, however, were down more than 15 percent from last year as low housing stock and lack of afford-ability, alongside climbing rates, appeared to have impacted demand. ¦