Mortgage applications rise as rates dip

• Mortgage applications rose 1.3%25 last week as borrowing costs dip
• Rate on 30-year-fixed mortgage falls to 4.73%25 from 4.8%25
• Economists keep close on eye on impact of rising rates on housing

NEW YORK — A dip in mortgage rates gave Americans a good reason to take out home-related loans last week, as applications for mortgages jumped 1.3%, according to the Mortgage Bankers Association.

The jump in seasonally adjusted mortgage applications for the week ended August 3 came as the interest rate on 30-year fixed mortgages fell to 4.73%, from a 2013 high of 4.80% a week ago, the MBA said.

However, much of the gains came from the refinance index, which jumped 2% from the previous week. Applications for the purchase index actually dropped 0.4%. The refinance index's share of total applications climbed to 61%, up from 60% in the prior week.

The housing industry

has been a big driver in the U.S. economic recovery. The real estate rebound has been driven by Federal Reserve policy that includes $85 billion in monthly purchases of mortgage-backed bonds and U.S. government bonds in an effort to keep borrowing rates low.

Since May, however, mortgage rates have jumped more than a full percentage point on fears that the Fed would start pulling back on its bond-buying program later this year.

In a sign that rising rates are slowing the housing momentum, pending home sales in July dropped 1.3%, the second month in a row in which contracts to buy fell. Similarly, new home sales in July plunged 13.4%.

Economists will be closely monitoring the impact of rising rates on the important housing market.