US mortgage rates increased last week to the highest since August, restraining home-purchase activity and prompting a sharp pullback in refinancing.

The contract rate on a 30-year mortgage rose 9 basis points to 6.65% in the week ended May 22, according to Mortgage Bankers Association data released Wednesday. Since the start of the Iran war at the end of February, the rate has climbed more than a half percentage point.

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MBA's refinancing index dropped more than 18% to an almost one-year low. The index of home-purchase applications slipped for a second straight week.

The yield on the 10-year Treasury note, which offers a guide to the direction of mortgage rates, has been rising as the Middle East conflict stokes inflation concerns. Last Tuesday, the yield jumped to the highest since January of last year.

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.