Borrowing costs ticked upward last week, driving a second consecutive week of declining mortgage application volumes, the Mortgage Bankers Association (MBA) reported Wednesday.

Contract mortgage rates for typical 30-year home loans averaged 6.65% over the week ending July 10, according to MBA data, matching highs from mid-May that were the highest levels seen since last August and notably above the prior week’s average of 6.58%.

Typical 30-year rates have been above 6.5% for eight consecutive weeks, and over 6.4% since the first month of the Iran war, which began in late February.

Meanwhile, the MBA’s Market Composite Index, a measure of mortgage loan application volume, fell 2.7% over the same seven-day period as a 4% weekly increase in the seasonally adjusted refinance index could not offset a 7% drop in its purchase counterpart.

“Purchase applications were down over the week and dipped below last year’s pace in the week following the July 4th holiday,” noted Joel Kan, deputy chief economist at the MBA, commenting on the figures in its weekly application report.

Despite heightened uncertainty among homebuyers, purchase mortgage application volumes have remained consistently higher than year-ago levels since the war began, with slight gains in affordability supported by lower mortgage rates than a year ago and softening home prices across much of the U.S.

But improvements in mortgage affordability, at least, have slowly dissipated amid inflationary impacts of the Iran war compounded by federal spending deficit concerns and uncertainty surrounding an operational overhaul at the Federal Reserve.

Mortgage rates may move even higher in the near term, experts tell Scotsman Guide, particularly as U.S. labor markets continue to show resilience. The MBA’s unadjusted purchase index was ultimately 2% lower than the same week a year ago as mortgage rates closed in on last year’s levels last week.

Refinance application activity increased last week, however, particularly among government borrowers seeking loans insured by the Federal Housing Administration (FHA) or Department of Veterans Affairs, the report said. The average mortgage rate for 30-year fixed-rate loans backed by the FHA rose to 6.33% from 6.28% the prior week.

The refinance share of mortgage activity jumped to 43.2% of all applications after easing to 40.6% the previous week. Kan noted in his commentary that FHA and VA refinance applications rose 9% and 10% respectively over the week.

Seasonally adjusted refinance activity ultimately landed 7% higher than a year ago, despite the step up in rates.