The average rate on the 30-year fixed-rate mortgage rose to 6.65%, the highest in nine months, worsening affordability for homebuyers.
The Iran war keeps oil prices elevated, fueling inflation and pushing up U.S. Treasury yields.
Mortgage applications dropped 8.5% week-over-week, driven by a decline in refinancing, according to the MBA.
Markets now price in a possible Fed rate hike by year-end, despite the new Fed chair Kevin Warsh taking office.
Limited housing supply and the rate lock-in effect continue to restrain home sales, with nearly two-thirds of mortgages still below 5%.
