U.S. mortgage applications dropped last week to their lowest level in four months as home loans rates jumped, an industry group reported on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes loans for home purchases and refinancings, fell 14.4 percent to 713.6 in the week ended Nov. 12, the lowest since the July 9 week.

Borrowing costs on 30-year fixed-rate mortgages surged to a two-month high of 4.46 percent in the week, up from 4.28 percent in the previous period. The rate last month reached 4.21 percent, the lowest level in the survey, which has been conducted weekly since 1990.

Market interest rates have risen despite the U.S. Federal Reserve's pledge to keep them low with the purchase of $600 billion in U.S. Treasury securities. Treasury rates, which help guide mortgage rates, have jumped amid concern that the Fed's effort would be its last, or even cut short if the economy shows more signs of life, economists said.

"Rates increased sharply last week due to stronger economic data and lingering uncertainty regarding the structure and impact of the Fed's" program, known as quantitative easing, Michael Fratantoni, the MBA's vice president of research and economics, said in a statement.

The MBA's seasonally adjusted index of refinancing applications slumped 16.5 percent to 3,831.0. The seasonally adjusted purchase index slipped 5 percent to 179.2.