US mortgage rates increased last week to an almost two-month high, weighing on home purchase activity. 

The contract rate on a 30-year mortgage rose 10 basis points to 6.56% in the week ended May 15, according to Mortgage Bankers Association data released Wednesday, just shy of the 6.57% reading at the end of March. Since the start of the Iran war at the end of February, the rate was up nearly a half percentage point through the latest week.

READ MORE: Mortgage demand for new homes dives in latest swing

An index of home-purchase applications fell 4.1%, the most since the week ended March 20. MBA's refinancing index eased slightly.

The yield on the 10-year Treasury note, which offers a guide to the direction of home-financing costs, has been rising as a jump in energy prices caused by the Middle East conflict contributes to inflation fears. On Tuesday, the yield jumped to the highest since January of last year.

Rising mortgage rates threaten to spoil budding optimism about a pickup in housing activity as the spring selling season gets underway. New-home sales in March were the strongest this year, while National Association of Realtors data showed April contract signings on previously owned homes reached a five-month high.

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.