Rising mortgage rates hurt both refinance and purchase application activity as volume decreased 7.4% from one week earlier, according to the Mortgage Bankers Association.

The MBA's Weekly Mortgage Applications Survey for the week ending July 7 found that the refinance index decreased 13% from the previous week to the lowest level since January. This week's results include an adjustment for the Fourth of July holiday.

The seasonally adjusted purchase index decreased 3% from one week earlier, while the unadjusted purchase index decreased 22% compared with the previous week and was 3% higher than the same week one year ago.

The refinance share decreased to 42.1% of total applications from 44.9% the previous week.

Adjustable-rate loan application activity decreased to 6.7% from 7.2%, while the Federal Housing Administration share increased to 10.4% from 10.2%.

The VA share increased to 11.5% from 10.3% and the USDA share decreased to 0.7% from 0.8%.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) increased 2 basis points to 4.22%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100), the average contract rate increased 9 basis points to 4.19%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased 8 basis points to 4.12%, while for 15-year fixed-rate mortgages, the average increased 7 basis points to 3.5%.

The average contract interest rate for 5/1 ARMs decreased 5 basis points to 3.32%.

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