NEW YORK - U.S. mortgage applications nudged higher last week, data from an industry group reported on Wednesday, as consumers showed a subdued reaction to the lowest interest rates in six months.

The Mortgage Bankers Association said interest rates on 30-year fixed-rate mortgages, the most widely used loan, fell for a sixth straight week, remaining below the 5 percent level, widely viewed as a psychological tipping point.

Attractive rates coupled with high affordability have been positives for the U.S. housing market, which has been showing signs of stabilization. Sales have surged in recent months as buyers scrambled to take advantage of the government's first-time home buyer tax credit.

Michael Moskowitz, president of Equity Now, a direct lender based in New York City and licensed in 11 states, said home loan demand at his company has jumped 20 percent over the past month, but also noted a lot of caution on behalf of consumers.

Buyers are tentative, however, and seem to need to think hard before moving ahead with a refinancing, he said.

Earlier this year, borrowers were more active and willing to say 'I'll take it' more quickly, he said. Now, they are tentative.

The MBA said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week to November 27 increased 2.1 percent to 613.7.

The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was up 0.2 percent.

It is taking people a long time to decide, he said.

The MBA said borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 4.79 percent, down 0.03 percentage point from the previous week, the lowest since the week ended May 15.

The rate remained above the all-time low of 4.61 percent set in the week ended March 27. The survey has been conducted weekly since 1990. Interest rates were also well below the year-ago level of 5.47 percent.

The MBA's seasonally adjusted purchase index, a tentative early indicator of home sales, rose 4.1 percent to 232.3. The seasonally adjusted index of refinancing applications increased 1.7 percent to 2,866.4.

The MBA said the results include an adjustment to account for the Thanksgiving Day holiday.

Last month the Obama administration extended the $8,000 first-time buyer credit, added a $6,500 provision for move-up buyers and increased income limits. The eligible borrowers must sign contracts by April 30 and close loans by June 30, 2010 instead of closing by the end of last month.

The U.S. housing market has suffered the worst downturn since the Great Depression and its impact has rippled through the recession-hit economy, as well as the rest of the world. Home price declines have been moderating in many regions of the country and in some areas have risen.

Many analysts, however, say prices are poised to fall again, with a new wave of foreclosures in the pipeline that is viewed as one of the largest obstacles to a recovery.

Problems in the housing market have also been moving up the loan quality chain. The current housing crisis had its roots in subprime mortgages made to borrowers with poor credit histories, which dominated the lower end of the market, while the middle and upper tiers of the market performed better. These higher tiers, however, have appeared increasingly troubled in the last quarter or two.

The MBA said fixed 15-year mortgage rates averaged 4.27 percent, down from 4.32 percent the previous week, and the lowest ever recorded in the survey, with the previous low being 4.32 percent recorded the previous two weeks and in October.

Rates on one-year ARMs decreased to 6.56 percent from 6.66 percent.

Mortgage