NEW YORK -- U.S. mortgage applications rose slightly last week, reflecting an increase in demand for home refinancing loans, an industry trade group said Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and purchasing loans, increased 0.5 percent for the week ended Oct. 20 to 588.6, its first rise in three weeks.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.36 percent, up 0.03 percent from the previous week. This marked the fifth straight weekly rise, but interest rates still stand well below a four-year high of 6.86 percent touched last June.

The MBA's seasonally adjusted purchase index, widely considered a timely gauge of U.S. home sales, fell 0.6 percent to 382.4. The index was substantially below its year-ago level of 466.4.

The group's seasonally adjusted index of refinancing applications increased 1.8 percent to 1,790.4. A year earlier the index stood at 1,916.8.

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The refinance share of applications increased to 45.6 percent from 45 percent the previous week.

Fixed 15-year mortgage rates averaged 6.03 percent, up from 6.01 percent. Rates on one-year adjustable-rate mortgages, or ARMs, edged up to 5.97 percent from 5.94 percent.

The ARM share of activity decreased to 26.1 percent of total applications from 26.5 percent the previous week.

The MBA's survey covers about 50 percent of all U.S. retail residential loans. Respondents include mortgage banks, commercial banks and thrifts.

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