Adjustable-rate mortgage demand doubles as interest rates hit the highest since 2009

Mortgage rates moved even higher last week, crashing refinance demand and prompting potential homebuyers to apply for riskier loan products which offer lower rates.

Total mortgage application volume fell 8.3% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Demand is now half of what it was a year ago.

Rising rates are to blame. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.37% from 5.20%, with points rising to 0.67 from 0.66 (including the origination fee) for loans with a 20% down payment. That is the highest rate since 2009. The rate…