Mortgage demand dropped again last week as rates climbed higher, but adjustable-rate mortgages, or ARMs, which offer lower rates, are seeing renewed demand after getting very little interest over the last decade.

Total mortgage application volume dropped 2% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index, a consequence of surging rates.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 6.81% from 6.75%, with points increasing to 0.97 from 0.95 (including the origination fee) for loans with a 20% down payment. That is the highest rate since 2006.

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“The news that job growth and wage growth continued in September is positive for the housing market, as higher incomes support housing demand. However, it also pushed off the possibility of any near-term pivot from the Federal Reserve on its plans for additional rate hikes,” wrote Michael Fratantoni, MBA’s chief economist in a release.

The average rate for 5/1 ARMs, which has a fixed rate for the first five years, increased slightly, but was still lower, at 5.56%. The ARM share of applications was just under 12%. When rates were lower at the start of this year, that share was barely 3%, where it had been for several years.

ARMs can be fixed for up to 10 years, but they are considered riskier loans because the rate eventually adjusts to the market rate. Rates have been so low for so long that before rates started to rise borrowers didn’t need to take on that additional risk.

Higher overall rates crushed refinance demand even further, with applications off 2% for the week and 86% from the year-earlier week. At this rate level, there are barely 150,000 borrowers who can benefit from a refinance, because so many people already have loans at far lower rates, according to Black Knight, a mortgage technology and analytics firm.

Mortgage applications to purchase a home, which fell 2% for the week, were 39% lower than a year ago. Buyers have stepped way back this fall, as higher rates have made affordability even worse. Home prices are starting to ease, but potential buyers also are concerned that if they buy now, their new home may drop in value in the coming year. Concerns over a recession also have buyers wary of making such a big investment.