The banking industry has taken only the first steps in a path to higher rates, but already the effects of that transition are having a noticeable impact.

American Banker's Index of Banking Activity (IBA) held steady in December, coming in at a reading of 55.6, compared to 55.9 in November and extending a period during which it has been contained in a tight range.

As was the case last month, the IBA's top line reading masked some significant volatility within the index's components. December saw declines in the indicators that track consumer loan demand, which were offset — and perhaps caused — by sharp increases in loan-pricing components. In one potentially troubling development, respondents from all four regions of the U.S. reported declines in local business conditions.

While the IBA typically registers seasonal declines in lending indicators during winter months, that shift has tended to occur in January or February. This particular set of data coincides with anecdotal reports of widespread declines in refinancing applications.