Mortgage applications dipped 0.8% last week from the previous week on a seasonally adjusted basis, according to the Mortgage Bankers Association, reports CNBC.

The reason for the drop, according to CNBC’s Diana Olick, is an increase in mortgage interest rates, which are moving higher at the fastest pace since early June. The rates started to move after the Federal Reserve signaled the possibility that it could raise rates in December.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.01 percent from 3.98 percent, with points increasing to 0.47 from 0.44 (including the origination fee) for 80 percent loan-to-value ratio loans.

“The troubling consideration is that the recent lows now run the risk of being cemented as a longer-term floor," wrote Matthew Graham, chief operating officer of Mortgage News Daily. "With expectations for a December rate hike from the Fed, longer term rates (like mortgages) will have a hard time to committing to any significant move lower unless something happens that is clearly seen as staying the Fed's hiking hand."

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