(Feb 21): US mortgage rates jumped above 7% for the first time since early December, dealing a blow to the housing market’s nascent recovery.

The contract rate on a 30-year fixed mortgage increased 19 basis points in the week ended Feb 16 to 7.06%, according to Mortgage Bankers Association data released Wednesday. It was the largest weekly increase since October.

The MBA’s index of applications for home-purchase mortgages fell more than 10% to the lowest level since November. The gauge has declined in each of the past four weeks.

Though mortgage rates are down from the highest levels in a generation, they are still more than twice as high as in 2021.

Buyers and sellers alike have been anxiously waiting for the Federal Reserve to start reducing interest rates, but officials have repeatedly signalled they’re in no rush. Looking ahead, the trajectory of inflation and a still-strong labour market — and how central bankers respond to them — will be key in defining the direction of mortgage rates.

The MBA’s overall index for mortgage applications, which tracks both home purchases and refinancing, declined 10.6% last week to the lowest level this year. The MBA’s index for refinancing also fell.

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