U.S. mortgage applications to buy a home and to refinance one increased last week as most borrowing costs fell in step with U.S. bond yields tied to worries about slowing economic growth, data from the Mortgage Bankers Association showed on Wednesday.

The Washington-based industry group's seasonally adjusted index on mortgage activity rose 2.3 percent to 384.0 in the week ended March 8.

The gauge has risen three of the past four weeks.

The Refinance Index decreased 0.2 percent from the previous week. The seasonally adjusted Purchase Index increased 4 percent from one week earlier. The unadjusted Purchase Index increased 6 percent compared with the previous week and was 2 percent higher than the same week one year ago.

"Led by a 5.5 percent increase in FHA loan applications, purchase activity picked up last week and was almost 2 percent higher than a year ago," said Joel Kan, Associate Vice President of Economic and Industry Forecasting.

"Purchase applications have now increased year-over-year for four weeks, which signals healthy demand entering the busy spring buying season. However, the pick-up in the average loan size continues, with the average balance reaching another record high. With more inventory in their price range compared to first-time buyers, move-up and higher-end buyers continue to have strong success finding a home."

The refinance share of mortgage activity decreased to 38.6 percent of total applications from 40.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.2 percent of total applications.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.64 percent from 4.67 percent, with points increasing to 0.47 from 0.44 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) increased to 4.45 percent from 4.41 percent, with points increasing to 0.34 from 0.25 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.02 percent from 4.08 percent, with points decreasing to 0.44 from 0.46 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.