The demand for housing loans improved in the US as the mortgage rates fell from their peak this year for the first time in four weeks.

Industry group, the Mortgage Bankers Association said that its seasonally adjusted index of mortgage application activity increased 1.3 per cent in the week till 30 August, 2013 after falling 2.5 per cent during the previous week. The index, which includes both refinancing and home purchase demand, rose as 30-year mortgage rates fell to 4.73 per cent compared to 4.80 per cent during the previous week. Experts have said that the higher rate of mortgages could slow down the housing market's momentum.

Home builders have said that the applications form potential buyers have been falling ever since the mortgage rates have risen by about one per cent. They said that if the plans to liquidate government-controlled mortgage guarantee giants, Fannie Mae and Freddie Mac are implemented, and the mortgage rates are likely to go up in the US economy. Mortgage rates still remain below historical standards and most economists do not expect them to affect the housing market recovery.

The survey included 75 per cent of all retail residential mortgage applications in the United states including the MBA.