Refinance volume led the charge, rising 4 percent for the week, although it was 39 percent lower compared with the same week one year ago. A year ago last week, rates were nearly a full percentage point lower.

Interest rates for home loans appear to be climbing again, and that may in fact be what's getting borrowers back to their brokers — fear that rates could move significantly higher in the coming months.

Borrowers who might have been thinking rates could move even lower may now be reacting to a new surge in rates, thinking they'd better get in now while the getting is still relatively good.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) rose to its highest level in more than seven years, 4.88 percent, from 4.84 percent, with points decreasing to 0.44 from 0.46 (including the origination fee) for loans with a 20 percent down payment.

"As markets received various pieces of data indicating economic strength such as wage growth, inflation, and jobless claims, Treasury rates were up over the week," said Joel Kan, an MBA economist.

Mortgage applications to purchase a home were basically flat for the week, moving just 0.3 percent higher. They were, however, 4 percent higher than the same week one year ago. Purchase applications were pretty slow all summer but have gained on an annual basis for the past five weeks.

Rising rates will only exacerbate already weakening affordability. Home prices continue to see gains, albeit smaller increases than in the past few years. Buyers are pulling back in high-priced markets like California, where homes are now sitting on the market longer and seeing price cuts.

"With additional rate hikes on the horizon, mortgage rates will likely only continue to rise and squeeze the market," said Mike Loewengart, vice president of investment strategy at E-Trade. "Right now there are a ton of positive signals in the economy, but clearly the housing sector is an increasingly glaring exception, and suggests the historic period of expansion we've enjoyed for the past decade could be winding down."