Demand for mortgages plummeted last week, pushing the index tracking mortgage applications down to a seven month low, even as average rates for a 30-year fixed mortgage moderated, a weekly report said Wednesday.

Loan applications decreased 15.8% in the week ending June 12, according to the  Mortgage Bankers Association, who have been conducting the survey since 1990. Meantime, the Purchase Index fell 3.5%.

The average contract rate for a 30-year fixed-rate mortgage decreased from 5.57% in the prior week to 5.50%. This is only the third straight week that mortgage rates have been above 5%; as recently as May 15, the average rate was 4.69%.

Over the past four weeks, the index tracking loan applications has fallen by an average of 13.5%, even as the four week moving average for purchases has edged up 0.7%. 

With interest rates much higher than in recent weeks, it should be no surprise that the dip in demand was led by a whopping 23.3% drop in refinance activity.  

"When rates move in volatile swings like this, it is critical (that) borrowers look for competitive rates ― competition in this environment keeps mortgage companies honest," Cameron Findlay, chief economist at LendingTree.com, told Reuters.

Refinance-related loans accounted for 54.1% of all mortgages in the week, compared to 59.4% in the week before.  Adjustable-rate mortgages accounted for 4.3% of new applications, compared to 3.4% in the prior week.  

It’s worth noting that mortgage rates, despite recent advances, are still comparative low on an historical basis. At this time last year, the average rate was 6.57%.