U. S. mortgage applications dipped last week, prompting weak demand for home purchase loans even as rates on 30-year loans slipped to their lowest level since December, data from an industry group posted on Wednesday.

Moreover, the proportion of applicants demanding refinances a loan rose to 69.7 percent last week from 69.2 percent the prior week.

The Mortgage Bankers Association revealed rates on 30-year fixed-rate mortgages, the most widely demanded loan, reported a fall below 5 percent for the first time since the week ended Dec. 18. Low mortgage rates fueled a slight uptick in demand for home refinancing loans last week, with activity reaching its highest level since the week ended Dec. 11.

In addition, it posted that borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 4.94 percent, reduced from 0.07 percentage point from the previous week, the lowest since the week ended Dec 18.

Celia Chen, Senior Director of housing economics at Moody's Economy. com in West Chester, Pennsylvania, said they expect 30-year fixed rate mortgages to reach 5.50 percent by the middle of the year and just shy of 6 percent by year-end.

"The end to the Federal Reserve's purchase of government-sponsored enterprise mortgage-backed securities, combined with slightly stronger inflationary expectations will cause rates to rise", she said.