U.S. mortgage applications rose for a second consecutive week as home refinancing demand reached its highest since March, 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, last week increased 1.4 percent to 561.2 — its highest level in 11 weeks.

Fueling the rise was a 4.6 percent jump in the MBA'S seasonally adjusted refinancing index to 1,640.8, its strongest level since end-March.

Click here to visit FOXBusiness.com's Real Estate Center.

The refinance share of mortgage applications also increased to 39.6 percent in the latest MBA weekly survey period, which ended Aug. 11. In the prior week the refinance share was 38.0 percent.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, last week averaged 6.54 percent, up 0.09 percentage point from the previous week when they sunk to their lowest level since March. The rates hit a four-year high of 6.86 percent last June.

The MBA's seasonally adjusted purchase mortgage index last week fell 0.8 percent to 385.9.

The purchase index, widely considered a timely gauge of U.S. home sales, was substantially below its year-ago level of 499.3. Last week's refinancing index was also below the year-earlier level of 2,285.5.

Fixed 15-year mortgage rates last week averaged 6.15 percent, up from 6.10 percent. Rates on one-year adjustable-rate mortgages (ARMs) increased to 5.97 percent from 5.96 percent.

ADJUSTABLE SHARE AT OVER 2-YEAR LOW

In the past, adjustable-rate mortgages, known as ARMs, have been a refuge for cash-strapped consumers seeking to buy a home with low initial mortgage payments. But with rates on fixed-rate loans dropping considerably in recent weeks, consumers have been refinancing out of their floating-rate products into fixed-rate loans, analysts say.

The ARM share of activity decreased to 27.2 percent of total applications — its lowest since February 2004 — from 27.6 percent the previous week.

After historically low mortgage rates fueled a five-year housing boom, the sector is feeling the heat and most analysts agree that the market is cooling off from its record run.

They point to housing market indicators showing sliding sales, swelling supply and abating price appreciation.

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

Click here to visit FOXBusiness.com's Real Estate Center.