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The Mortgage Bankers Association reported today that applications for home loans notched a double-digit increase last week. The industry group's market composite index climbed by 11.2% compared to the previous seven-day period. This marks the only the third time in 10 weeks that the index has headed higher. At the present level, it's off its May high by 54.1%.

There's little question that higher mortgage rates are to blame for the overall downward trend. Since the first week of May, the average rate on a conforming 30-year fixed-rate mortgage has skyrocketed, going from 3.35% all the way up to 4.57% today. The magnitude and speed of the advance have been unprecedented.

Applications to refinance existing mortgages have been the hardest hit by the hike in rates. The week before last served as a prescient reminder of this, as the MBA's refinance index dropped by a precipitous 20%, the biggest single-week decline of 2013.

With this in mind, last week's results, in which refinance applications were up 18%, came as a welcome relief. Nevertheless, they're still off their early May high by 64%. Over the same time period, moreover, they've gone from a 76% share of overall mortgage application activity down to a 61% share.

Applications to purchase a home haven't been hit as hard. The MBA's purchase index increased last week by 3%. But this gain aside, purchase-money mortgage applications remain down on a year-over-year basis following last week's massive fall.

The impact of this has obviously begun to reverberate through the mortgage market. Wells Fargo (NYSE:WFC), the nation's largest mortgage originator, recently said that it's laying off 2,300 employees in its mortgage department, JPMorgan Chase (NYSE:JPM) acknowledged earlier this week that it expects to lose money in its mortgage originations business in the latter half of the year, and Bank of America (NYSE:BAC) is letting 2,100 employees go from the same department.

All three banks have also felt the impact on the balance sheets last quarter, notching declines in the accumulated comprehensive incomes of $3.4 billion, $3.4 billion, and $4.2 billion, respectively.

John Maxfield owns shares of Bank of America. The Motley Fool recommends Bank of America and Wells Fargo. The Motley Fool owns shares of Bank of America, JPMorgan Chase, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.