Mortgage applications in the U. S. fell for a third consecutive week as demand for loans to purchase homes and refinance declined.

The volume of mortgage applications in the U. S. last week registered a fall of seasonally adjusted 8.5%, compared with the previous week as demand for loans to purchase homes and refinance reduced, the Mortgage Bankers Association reported on Wednesday.

The Mortgage Bankers Association's index reported an 8.5 percent fall in the week ended Feb. 19. The Washington-based group's refinancing measure reduced by 8.9 percent and the purchase gauge decreased 7.3 percent.

"Sales continue to be buffeted by economic headwinds", Chris Rupkey, Chief Financial Economist at Bank of Tokyo- Mitsubishi UFJ Ltd. in New York, said before the report. "Consumers are weighing the timing of when to refinance or purchase a property more carefully".

The average rate on a 30-year fixed loan increased to 5.03 percent, the largest since the week ended Jan. 8, from 4.94 percent, the group posted. The rate touched 4.61 percent at the end of March 2009, the lowest since the association's records began in 1990.

Still, home-improvement retailers stick to their optimistic view. Lowe's Cos., the second-largest home-improvement chain, reported fourth-quarter profit that exceeded analysts' estimates after better-than-forecast sales.