Mortgage demand is falling fast, an early preview of the risks from the sudden jump in interest rates.

Mortgage applications in the week ended Nov. 11 fell 9.2% from a week earlier as demand fell for both refinances and purchases, according to data Wednesday from the Mortgage Bankers Association. Demand for both types of transactions is now back to early 2016 levels, when average rates on 30-year fixed mortgages were last above 4%.

Mortgage rates rose in the wake of Donald Trump's election last week as 10-year Treasury yields leapt. The average rate on 30-year fixed mortgages has been climbing every day since Mr. Trump was elected, reaching 4.02% on Tuesday?up 0.40 of a percentage point since election day, according to MortgageNewsDaily.com. That is the largest increase in four days oftrading since June 2013 when the Federal Reserve announced it might dial back its stimulus program.

Lenders and analysts are cautioning that too much of a pickup in a short period could hit demand for mortgages. That could have a domino effect on home prices that have appreciated rapidly in many U.S. housing markets over the last two years.

Low interest rates have allowed home buyers to purchase more expensive homes than they would otherwise be able to afford. Rising rates, in contrast, would place more homes out of reach for buyers. Some analysts are predicting that rising rates will result in home values in certain U.S. markets declining next year.

Mortgage sales also are at stake. Origination volume was a bright spot for many banks and nonbank lenders before the election. Mortgage rates were ranging between 3.4% and 3.7% for much of the year, helped in large part by the U.K.'s Brexit vote. That sent 10-year Treasury yields plummeting. Several large banks went on a hiring spree and a mortgage bankers's trade group predicted total origination volume would hit nearly $1.9 trillion this year, the highest since 2012.

Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com

(END) Dow Jones Newswires

November 16, 2016 12:25 ET (17:25 GMT)

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