NEW YORK (CNN/Money) - No Federal Reserve official could ever publicly admit it, though everyone in the financial world seems to believe that it's true: the Fed is going to raise rates until it's taken the heat out of the housing market.

And if it as true as everyone thinks, these tight-lipped Fed folk must be secretly doing a little victory dance behind the thick gray walls of the Board of Governors in Washington.

First we see that home affordability has fallen because home prices are leaping -- what the Fed is

worried about -- and because interest rates are rising -- the Fed's weapon to fight it.

Then we see shares of homebuilding giant Toll Brothers get hammered because they see signs of softening demand in some regions.

The latest tally of mortgage applications form the Mortgage Bankers Association shows a blip up after three weeks of declines, but applications are now down nine percent from last year. In fact the MBA points out in its press release today that mortgage applications last week fell below their 2004 level for the first time in six months.

Anecdotally a friend who is looking to buy an apartment in the NYC area reports that sellers are calling back after three or four weeks to say that they have lowered their asking price. That's something that never would have happened three years ago, this potential homebuyer observes.

So, the fact that the Fed has succeeded in pushing mortgage rates higher is definitely having an effect.

Many have blamed the Fed for, if not a housing bubble, a bubble-like market in many areas, saying that their steep rate cuts after the 2001 recession created a pool of cheap money that poured into housing. And their dogged insistence on raising rates is seen as an attempt to correct that.

How much further do they go? Will they overshoot and really crack the housing market? It is surely a risk they are aware of and one we can only hope they take seriously in the policy decisions ahead.

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Kathleen Hays is economics correspondent for CNN. Read more of her columns here.