The Mortgage Bankers Association (MBA) reported on Wednesday the mortgage application volume in the U.S. plunged 6.9 percent in the week ended October 1, following a 1.1 percent drop in the previous week. This marked the largest decline in total mortgage application volume since the last week of June.

According to the report, refinance applications tumbled 9.6 percent, while applications to purchase a home fell 1.7 percent.

Meanwhile, the average fixed 30-year mortgage rate increased from 3.10 percent to 3.14 percent, the highest level since early July.

“Higher rates are reducing borrowers’ incentive to refinance, as declines were seen across all loan types,” noted Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Purchase activity also fell, driven by a drop in conventional loan applications. Government purchase applications were up over 1 percent, but that was still not enough to bring down the average loan balance of $410,000. With home-price appreciation and sales prices remaining very elevated, applications for higher balance, conventional loans still dominate the mix of activity.”