NEW YORK -- U.S. mortgage applications fell last week, reflecting a drop in demand for home purchase loans as interest rates climbed, 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, for the week ended Jan. 12 decreased 0.6 percent to 667.2.

However, the four-week moving average of mortgage applications rose 0.8 percent.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.19 percent, up 0.06 percentage point from the previous week. Interest rates were above year-ago levels of 6.07 percent.

The MBA's seasonally adjusted purchase index, widely considered a timely gauge of U.S. home sales, fell 7.0 percent to 439.7. The index was also below its year-ago level of 443.9.

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REFINANCING RISES

The group's seasonally adjusted index of refinancing applications rose 6.3 percent to 2,045.8, its third consecutive weekly climb. A year earlier the index stood at 1,645.2.

The refinance share of applications increased to 49.9 percent from 48.4 percent the previous week.

Fixed 15-year mortgage rates averaged 5.92 percent, up from 5.85 percent. Rates on one-year adjustable-rate mortgages (ARMs) increased to 5.85 percent from 5.79 percent.

The ARM share of activity increased to 21.2 percent from 20.1 percent the previous week when it was at its lowest since July 2003.

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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