Applications for U.S. home mortgages increased last week amid a rise in purchasing and refinancing activity as mortgage rates eased, an industry group said on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity increased 4.3 percent to 729.6, partially offsetting the 10.5 percent decline during the previous week. The MBA's seasonally adjusted index of refinancing applications climbed 6.4 percent 2167.9, after falling 10.0 percent the prior week. The MBA's purchase index, a gauge of loan requests for home purchases, rose 2.8 percent to 482.3, after dropping 10.8 percent the week before. "Rates have declined 14 basis points over the last two weeks. While the number of refinance applications increased ... the dollar volume increased by more than twice that amount, 13.5 percent, consistent with the idea that borrowers with larger balance loans respond quickly to even small rate incentives to refinance," Jay Brinkmann, vice president, in the MBA's research and economics department. According to the MBA, fixed 30-year mortgage rates averaged 5.63 percent last week, excluding fees, down 10 basis points from 5.73 percent the previous week. Rates are lower than where they stood in early April when the fixed 30-year mortgage rate was at 5.91 percent. Interest rates are also much lower than where they stood a year ago. Low mortgage rates have supported the housing sector, generating economic growth in recent years. Industry analysts and economists have said they expect home sales to edge off their record 2004 levels as the Federal Reserve raises rates, but there has been little sign that demand has weakened.