Applications for home mortgages slipped last week, led by a drop in purchase demand as low interest rates were not enough to entice home buyers, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 2.6 percent in the week ended Dec 16.

The MBA's seasonally adjusted index of refinancing applications dipped 1.6 percent, while the gauge of loan requests for home purchases lost 4.9 percent.

Remarkably low rates are not enough, as many homeowners continue to hold back due to lack of equity in their properties, poor credit and a weak job market, Michael Fratantoni, MBA's vice president of research and economics, said in a statement.

Fixed 30-year mortgage rates averaged 4.08 percent, down 4 basis points from 4.12 percent the week before. It was the lowest rate this year, the MBA said.

The refinance share of total mortgage activity rose to 80.7 percent of applications from 79.7 percent the previous week.

The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

(Reporting By Leah Schnurr; Editing by Leslie Adler)

Mortgage