RTTNews - U.S. mortgage applications rose last week as interest rates decreased, increasing the affordability of home purchases and refinancing, according to data released by the Mortgage Bankers Association on Wednesday.

The week ending August 14 was the third straight week that applications rose, as the Market Composite Index-which includes both purchase and refinance loans-increased 5.6 percent on a seasonally adjusted basis from the previous week.

On an unadjusted basis, the measure of mortgage application volume increased 4.8 percent from the previous week and 25 percent from the same week last year.

Other data released showed that the average contract interest rate for 30 year fixed-rate mortgages fell to 5.15 percent from 5.38 percent, and points for 80 percent loan-to-value ratio loans decreased from 1.18 to 0.98.

For 15-year fixed rate mortgages, the average contract interest rate decreased from 4.71 percent to 4.52 percent and points for the LTV loans decreased to 0.93 from 1.20.

The average contract interest rate for one-year adjustable rate mortgages decreased to 6.66 percent from 6.71 percent and points decreased from 0.08 to 0.07.

It was also reported that the Refinance Index increased 6.9 percent after dropping 7.2 percent the previous week. The seasonally adjusted Purchase Index increased for the third straight week, rising 3.9 percent.

Data also showed that the four week moving average for the seasonally adjusted Market Index is down 0.1 percent. The same average is up 1.5 percent for the seasonally adjusted Purchase Index, and is down 1.4 percent for the Refinance Index.

The MBA revealed that the refinance share of mortgage activity increased to 53.3 percent of total applications from 52.3 percent the week before. The adjustable-rate mortgage share of activity increased from 5.8 percent of total applications to 6.5 percent.

The U.S. housing-market, one of the areas hardest hit by the financial crisis, has recently been showing signs of stabilization, with home sales rising and price declines moderating or rising in many regions of the country. This data may be a further indication that the market is rebounding, though economists say it's hard to know for sure.

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