U.S. mortgage rates rise for first time in a month, denting demand

U.S. mortgage rates increased for the first time in a month, denting demand for home-buying and refinancing.

The contract rate on a 30-year fixed mortgage increased 4 basis points in the week ended May 24 to 7.05%, according to Mortgage Bankers Association data released Wednesday. That dragged down a gauge of refinancing by more than 13%, while purchasing activity fell to the lowest level in three months.

Mortgage rates move in tandem with Treasury yields, which rose last week as economic data showed strength in U.S. business activity and a tight labor market. That prompted traders to push back their expected timing for Federal Reserve interest-rate cuts until the end of this 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 U.S.