The volume of mortgage applications filed in the U.S. last week fell a seasonally adjusted 9.5 percent from the previous week, the Mortgage Bankers Association reported Wednesday, as higher interest rates versus late last year discouraged recent activity.

Refinance activity was down 11 percent to its lowest reading since the week ending July 3, 2009, according to the MBA’s weekly survey, which covers more than half of all U.S. retail residential mortgage applications. Purchasing activity fell 0.9 percent in the week ended Friday.

“Mortgage rates remained above 5 percent last week, up almost a full percentage point from their October lows, and refinance volume continued to drop,” Michael Fratantoni, MBA’s vice president of research and economics, said Wednesday. “Buyers have not returned to the market as rising rates have reduced affordability, to some extent.”

The real-estate market has been undergoing a fitful recovery since demand plunged last year when a popular tax break for first-time home buyers expired. New-home sales in the U.S. surged in December, but 2010 was still the worst year on record for the battered home-building industry.

Wednesday, the MBA said the share of applications filed to refinance an existing mortgage fell to 64 percent of total applications from 66.6 percent the previous week.

The four-week moving average for all mortgage applications was down 4.5 percent.

Adjustable-rate mortgages made up 6% of activity last week, up from 5.9 percent a week earlier.

Rates on 30-year fixed-rate mortgages averaged 5.12 percent, down from 5.13 percent, while the average for 15-year fixed-rate mortgages rose to 4.34 percent from 4.29 percent.