Mortgage demand continued to plummet last week, after mortgage rates rose to their highest level in over a year.

Total mortgage application volume dropped 2.9% week to week, according to the Mortgage Bankers Association’s seasonally adjusted index. Applications were also 5% lower than they were the same week one year ago. That is the first time volume was lower annually since April.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $832,750 or less, increased to 6.81% from 6.76%, with points decreasing to 0.65 from 0.69, including the origination fee, for loans with a 20% down payment.

“In the wake of the July FOMC meeting, longer-term rates increased, with mortgage rates reaching their highest level in more than a year,” said Mike Fratantoni, MBA’s chief economist and senior vice president research and business development in a release. “Application volume for both refinance and purchase loans declined for the week, and are now running behind last year’s pace, indicating that higher mortgage rates have weakened overall demand.”

Applications to refinance a home loan fell 2% for the week and were 9% lower than for the same week one year ago. The rule of thumb for refinancing tends to be that if a borrower can’t shave at least three quarters of a percentage point off of a current rate, it’s not worth the cost. With rates this high, there is a shrinking pool of homeowners who could benefit.

Applications for a mortgage to purchase a home dropped 4% for the week and were 3% lower than the same week one year ago. While there is more supply on the market, and homes are sitting longer, prices are still stubbornly high. Buyers do have more negotiating power in certain markets, but these higher rates are offsetting any savings they might be able to get on price.

Mortgage rates did begin to slide at the start of this week, according to a separate survey from Mortgage News Daily. A pullback in the Iran war rhetoric caused oil prices to slide, and mortgage rates followed first timidly Monday, then more substantially Tuesday.

“The additional gains in the bond market (courtesy of Iran-related headlines and lower oil prices) offered enough reassurance for mortgage lenders to get a bit more aggressive in terms of keeping pace with the market,” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “The net effect is an average 30-yr fixed rate that is now down to the lowest levels in just over 2 weeks.”