Fear of massive deficits and inflation may or may not be driving up interest rates, but the impact of the rate rise is not up for dispute. This from Barclays:

Mortgage rates jumped to their highest since November, stifling refinancing

The Mortgage Bankers Association’s index of mortgage applications fell 7.2% w/w in the week ending June 5, marking the third consecutive weekly decline. The downturn owes to a sharp drop in refinancing activity as a result of higher mortgage rates.

The index of refinancing applications fell 11.8% in the latest week, pushing the index to the lowest level since November of last year (Figure 1). The index of purchase applications inched up 1.1%, leaving the four-week moving average up 0.5%.

The average rate on the 30y conforming mortgage (as measured by the MBA) jumped 32bp to 5.57%, also the highest since November. Mortgage rates have jumped more than 100bp from the trough of 4.62% at the end of April.