U.S. mortgage applications increased for the first time in three weeks as interest rates went near record-low stimulating the demand for home refinancing and purchase loans according to the Mortgage Bankers Association.

The association reported that its seasonally adjusted index of mortgage applications for the week ended March 6 rose 11.3 percent to 723.4. This includes both purchase and refinances loans.

The surge can be contributed to the announcement of the stimulus bill which is considered the biggest government action yet to aid troubled homeowners.

Last month, the government unveiled the Homeowner Affordability and Stability Plan, which is expected to provide much-needed support to the battered housing market.

The goals of the housing plan are to support refinancing for good quality borrowers; help distressed borrowers avoid foreclosure; and stimulate new housing demand.

The 30-year fixed-rate mortgages, excluding fees, averaged 4.96 percent, down 0.18 percentage point from the previous week and the second lowest rate since the weekly MBA survey was started in 1990. The record low was 4.89 percent for the week ended January 9, 2009.