can a mortgage underwriter adjust the refiance loan rate base on the apprasial report of the house?

I am applying for refinancing- FHA loan. I bought a house for $ 75000 two years old and the appraiser appraise the house for $ 85000. My loan officer told me the underwriter change my appraisal to $ 80000; therefore, my refinance loan rate has gone up from 3.875% to 4.25%. It just doesn’t make sense to me how the underwriter can increase the rate like that.
it was recently appraised for $ 85000, but the underwrite knocks it down to $ 80000. Home value in my area is going up. What I don’t understand is whether an underwriter has the power to change the loan rate. I thought an underwriter either approve or not approve.

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