US mortgage rates climbed back above 7% last week, driving a decline in applications to finance home purchases.

The contract rate on a 30-year fixed mortgage rose 10 basis points (bps), the steepest increase in more than two months, to 7.03% in the week ended June 28. Figures from the Mortgage Bankers Association (MBA) also showed the five-year adjustable-rate mortgage climbed 9bps to a three-week high of 6.38%.

A gauge of mortgage applications to buy a home fell 3.3%, the first decline since the end of May, the figures released on Wednesday showed. The drop indicates potential homebuyers remain sensitive to changes in borrowing costs and suggests a bumpy path to a more durable recovery for the housing market.

MBA’s overall index of applications, which includes those for home purchases and refinancing, slipped 2.6%. The group’s refinancing gauge fell for a third straight week.

The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.

  - Bloomberg