Total mortgage application volume fell 9.2 percent on a seasonally adjusted basis from the previous week, according to the Mortgage Bankers Association.

The drop was expected, given how quickly mortgage interest rates rose, CNBC explained.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 3.95 percent, from 3.77 percent, with points increasing to 0.39 from 0.38 (including the origination fee) for 80 percent loan-to-value ratio loans, the MBA said.

"Following the election, mortgage rates saw their biggest week-over-week increase since the taper tantrum in June 2013, and reached their highest level since January of this year," said David Stevens, president and CEO of the Mortgage Bankers Association.

"Investor expectations of faster growth and higher inflation are driving the jump up in rates, and rates have now increased for five of the past six weeks, spurring a commensurate drop in refinance activity," Stevens said.

"It is no surprise that refinance volume has fallen, as the long boom has meant that there are fewer borrowers with any incentive to refi," said Stevens. "We continue to expect strong growth in home sales and purchase volume over the next few years, given our expectations of a strong job market and favorable demographics. The decline this week likely just reflects potential buyers waiting to see whether rates will stay at these higher levels."

To be sure, a sustained surge in borrowing costs could further hinder first-time purchases at a time when rising values are already hurting affordability and pricing out buyers in many markets, Bloomberg reported.

What’s more, the back-up in rates would leave the economy wanting of a boost from residential construction that’s failed to contribute to growth for two consecutive quarters.

“It’s not helpful at all for the housing market, and it also bears watching in terms of how bad it gets,” said Scott Brown, chief economist at Raymond James Financial Inc. in St. Petersburg, Florida. The housing rebound “could be even more moderate than it has been.”

(Newsmax wire services contributed to this report).

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