(Adds details on latest data)
NEW YORK, July 12 (Reuters) - U.S. mortgage application activity recorded its steepest drop since December as interest rates on 30-year fixed-rate home loans climbed to their highest level in nearly two months, Mortgage Bankers Association data released on Wednesday showed.
The Washington-based group said its seasonally adjusted index for mortgage applications fell to 391.9 in the week ended July 7, down 7.4 percent from the prior week which marked its biggest decline since a 12.1 percent fall in the Dec. 23 week.
It fell to its lowest level since the week of Feb. 17.
Interest rates on conforming 30-year fixed-rate mortgages climbed to 4.22 percent, its highest since the May 12 week and up from the prior week's 4.20 percent.
Conforming loans are those with balances of $424,100 or less that qualify for guarantees from federal mortgage agencies Fannie Mae and Freddie Mac.
Average rates on other types of mortgages that the MBA tracks were five to nine basis points higher than the preceding week.
The MBA's seasonally adjusted gauge of applications for home purchases, a proxy for future home sales, fell 2.5 percent to 242.8 last week.
The group's seasonally adjusted barometer of refinancing applications decreased to 1,210.5, the lowest since the week of Jan. 6. It was 13 percent lower than the previous week for its steepest fall since a 23.2 percent decline in the Dec. 23 week.
Reporting by Richard Leong; Editing by Chizu Nomiyama