Data from the Mortgage Bankers Association found the number of mortgage applications was 7% lower than last week. This is despite adjustments for the Labor Day public holiday being taken into account.

Concerns over world markets and potential policy changes from the Federal Reserve central bank were blamed for the slowdown.

Applications for remortgage loans dropped by 9% compared to the previous week, despite rates having fallen significantly in recent months.

Mortgages for new home purchases were also down, dropping 4% compared to a week ago. Total purchase volume has dropped by 17% in the last month, the survey said.

The Mortgage Bankers Association said the average 30-year fixed rate mortgage – the typical mortgage length in the United States – was on offer at 4.09%. It said interest rates were not expected to rise significantly before the end of the year.

“Given recent economic growth and job market health, we had been expecting a September rate hike, however, given recent financial market volatility and global growth concerns, along with still-low US inflation, we are expecting the first rate hike to be moved to December 2015,” said Mike Fratantoni, chief economist for the Mortgage Bankers Association.