Mortgage applications mostly held steady in the latest week as interest rates dropped slightly. But CNBC reports that we could simply be in “the calm before the storm.” The Federal Reserve is largely expected to start raising rates in September, which likely will impact loan demand.

For the week ending Aug. 21, total mortgage applications – including for refinancings and home purchases – rose 0.2 percent week-to-week on a seasonally adjusted basis, the Mortgage Bankers Association reported on Wednesday.

Check our report and infographic of last week's numbers.
Broken out, refinance applications dropped 1 percent while applications for home purchases ticked up 2 percent. Applications for home purchases are 18 percent above the same week a year ago, according to MBA. Meanwhile, MBA reports the average interest rate for a 30-year fixed-rate mortgage fell to 4.08 percent, falling from 4.11 percent the week prior.

The stock market’s plunge on Monday sent mortgage rates lower, and lenders were reporting stronger interest from consumers on Monday.

"The turmoil in global stock markets and subsequent drop in interest rates that began late last week is not evident in these results, but will likely have a significant impact on next week's results," says Mike Fratantoni, MBA’s chief economist.

But as rates move higher — which they are largely expected to soon do — home buying also will likely see some initial momentum from the increases.

“Rate moves, especially higher, can cause a short-term surge in home buying” as buyers rush to lock in low rates before any additional increases, CNBC reports. “When rates sit at low levels for a long time, buyers are less apt to act.”

Susan Maklari, senior equity analyst at UBS, told CNBC that they continually hear from homebuilders that there is a lack of urgency among buyers “in part because rates haven't moved at all.”

Source: “Mortgage Applications Up 0.2%, Steady Before Market Storm,” CNBC (Aug. 26, 2015)