U.S. mortgage applications rise, but so do rates: MBA NEW YORK (Reuters) - Potential buyers crept back into the U.S. housing market last week as applications for mortgages edged up, even though rates resumed their ascent, data from an industry group showed on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 0.2 percent in the week ended Aug 2. The gauge of loan requests for home purchases, a leading indicator of home sales, was stronger, adding 0.7 percent after falling in four of the past five weeks. Appetite for mortgages has dropped over the summer, hurt by a surge in interest rates on the Federal Reserve's plan to start slowing its economic stimulus later this year if the economy progresses as expected. The Fed is currently buying $85 billion in bonds a month to keep borrowing costs low. The cheap mortgage rates have helped spur home buying and worries have emerged that higher costs could take some of the strength out of the housing market's recovery. Fixed 30-year mortgage rates rose again last week to average 4.61 percent, up 3 basis points from the week before. Rates have risen more than 1 percentage point since early May, but still remain low by historical standards. The increase cut into refinance demand, which has been hit harder by the rise in rates, as higher costs make refinancing less lucrative. The refinance index slipped 0.1 percent to 2,244.7 and the refinance share of total mortgage activity was unchanged at 63 percent. The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA. Reporting by Leah Schnurr; Editing by Diane Craft