The weekly index of Mortgage Applications, which measure loan application volume as compiled by the Mortgage Bankers Association, rose 2% in the week ending May 1.   

Refinance loans made up 74.4% of total applications, a decrease from 75.3% in the previous week. Adjustable-rate mortgages once again made up 2.1% of total applications.

The seasonally adjusted index of applications is now at 979.7.

The increase occurred even as mortgage costs had risen to their highest levels since mid-March. The average interest rate on a 30-year fixed-rate mortgage averaged 4.79% in the week, up 0.17 percentage points from the prior week.

The weekly release from the MBA covers about half of all U.S. retail residential mortgage applications, and has been conducted since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990.

The advance in applications is consistent with Ben Bernanke’s testimony on Tuesday. The Federal Reserve chairman said a shrinking supply of housing starts, increased demand from consumers, and generally lower mortgage rates were helping the housing market to stabilize.

“Although some of the boost to sales in the market for existing homes is likely coming from foreclosure-related transactions, the increased affordability of homes appears to be contributing more broadly to the steadying in the demand for housing,” he said.

Despite the weekly advance in loan applications, the four-week moving average is down 6.0%.