US mortgage rates approached 7% last week, prompting a decline in applications for home purchases.

The contract rate on a 30-year fixed mortgage increased 13 basis points to 6.97% in the week ended March 15, according to Mortgage Bankers Association data released Wednesday.

The MBA’s index of mortgage applications for home purchases declined 1.2% to 146.

Mortgage rates have fallen from an October peak near 8%, but remain more than twice as high as they were in 2021 before the Federal Reserve began an aggressive hiking campaign to quell inflation. When the Fed begins lowering rates, possibly in mid-year, that’s expected to boost demand across the housing market.

The MBA’s overall index for mortgage applications, which tracks both home purchases and refinancing, decreased 1.6% last week to 198.2. The measure for refinancing fell 2.5%.

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.

Orphe Divounguy, senior macroeconomist at Zillow Home Loans, says “Expect more rate volatility ahead as the Fed and investors wait for more conclusive evidence of a return to low, stable and more predictable inflation.”