Mortgage applications rose last week, fueled by increased demand for home purchase loans even as interest rates hit their highest levels in nearly a year, Reuters reported this morning.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchasing and refinancing loans, increased 1.1 percent to 626.2 for the week ended July 6.

The index’s four-week moving average was down 1.6 percent at 627.

Borrowing cost on 30-year fixed-rate mortgages, excluding fees, averaged 6.65 percent, up 0.15 percentage point, the highest level since the week ended July 21, 2006, when the figure stood at 6.69 percent.

The rise in demand for loans to buy homes last week offset lower refinancing activity.

The MBA’s seasonally adjusted purchase index, widely considered a timely gauge of U.S. home sales, rose 3.8 percent to 453.9. The index was above its reading a year earlier of 425.



The group’s seasonally adjusted index of refinancing applications decreased 3 percent to 1,636.9, its lowest level since December 2006.