The short-term drop in mortgage interest rates just before the emergency Fed rate cut in January of .075% and before its 0.5% cut at the regularly scheduled FOMC meeting at the end of January started a mortgage refinance party. But that party ended pretty quickly because mortgage interest rates are back on the raise. So it's not surprising that mortgage applications dropped like a stone by 22.6% to 822.8 last week. That level was last seen on Jan. 4 before the mortgage rate cutting party began in anticipation of the Fed rate cuts.

Many are sitting on the sidelines waiting to see if the Fed will cut another 0.5%, as analysts expect at its next meeting March 20 and 21. Since inflation appears to be heating up, that rate cut may not be a lock. Upward prices on food, energy and health continue to wield considerable inflationary pressures.

Since home sales continue at a snail's pace most new mortgage applications are for refinances, so these applications drop off dramatically as interest rates rise. Borrowing cost for 30-year fixed-rate mortgages were up about 0.37% from the previous week and averaged 6.09%, which was slightly below last year's level of 6.19%. Mortgage rates usually go up as the 10-year U.S. Treasury notes, which hit its highest yield on Tuesday at 3.915% since early January. Fixed 15-year mortgage rates averaged 5.55% up from 5.18% last week. Rates on one-year ARMs were unchanged at 5.72%. Now is definitely not the time to even think about an ARM. If you are taking a loan lock in that fixed rate.