Mortgage refinance demand surges even as rates cross back over 7%.

Overall mortgage demand has now moved sideways for three straight weeks, but last week saw a split between those looking to buy a home and those hoping to save money with a refinance.

Total mortgage application volume increased just 0.1% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index, essentially flat.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 7.01% from 6.91%, with points remaining at 0.59 (including the origination fee) for loans with a 20% down payment.

“Mortgage rates moved higher last week as several Federal Reserve officials reiterated a patient posture on rate cuts. Inflation remains stubbornly above the Fed’s target, and the broader economy continues to show resiliency. Unexpectedly strong employment data released last week further added to the upward pressure on rates,” said Joel Kan, MBA’s vice president and deputy chief economist.

Applications to refinance a home loan jumped 10% for the week and were 4% higher than the same week one year ago. Refinance demand usually drops when rates rise, but rates had fallen back slightly in the previous weeks, so some homeowners may have been waiting for them to go even lower. When rates rose last week, they may have been concerned rates would then move even higher, and therefore jumped in to get what savings they could.

Applications for a mortgage to purchase a home fell 5% for the week and were 23% lower than the same week one year ago. The spring market is well underway, and while there is slightly more inventory now than there was a year ago, it is still well below where it should be given high demand. Home prices are also showing no sign of cooling.

Investors have been waiting for the all important monthly report on consumer prices, an indicator of inflation. It is set to be released Wednesday morning, and depending on the outcome, mortgage rates could make a strong move in either direction.