The Mortgage Bankers Association on Wednesday confirmed the obvious, when rates go up, people borrow less.

The MBA's Market Composite Index, which measures mortgage application volume, dropped 9.5% last week on a seasonally adjusted basis from a week earlier. On an unadjusted basis, the Index was down 7.9%.

The Refinance Index fell 11.4% from the previous week to its lowest level since the week ending July 3, 2009.

The seasonally adjusted Purchase Index declined 5.9% from one week earlier.The unadjusted Purchase Index decreased 0.9% compared with the previous week and was 18.2 percent lower than the same week a year ago.

"Mortgage rates remained above 5 percent last week, up almost a full percentage point from their October lows, and refinance volume continued to drop," said Michael Fratantoni, MBA's vp of research and economics."Applications for home purchases also declined on a seasonally adjusted basis. Buyers have not returned to the market as rising rates have reduced affordability to some extent."

The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.12% from 5.13%, with points increasing to 0.85 from 0.84 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The rate for 15-year fixed-rate mortgages increased to 4.34% from 4.29%, with points decreasing to 0.85 from 1.02, the highest contract 15-year rate since April 2010.

The four week moving average was down 4.5% for the seasonally adjusted Market Index, down 1.9% for the seasonally adjusted Purchase Index and down 6.2% for the Refinance Index.

The refinance share of mortgage activity decreased to 64% from 66.6% the previous week, the fourth straight week the share has declined. The adjustable-rate mortgage (ARM) share of activity increased to 6.0% from 5.9% of total applications from the previous week.