Home loan demand climbed last week but record low mortgage rates failed to light a fire in a market constrained by unemployment and tight lending practices.

Mortgage purchase and refinancing applications rose by less than 1 percent in the first week of August, even as 30-year loan rates fell to 4.57 percent, the lowest in 20 years of record keeping by the Mortgage Bankers Association.

This contract rate, which excludes added lender fees and points, was down from 4.60 percent the prior week and 5.38 percent a year ago, the industry group said on Wednesday.

Consumers don't have a sense of urgency right now, said Patrick Lashinsky, president and chief executive of real estate brokerage ZipRealty in Emeryville, California

They think that interest rates seem to be continuing to go down, they don't expect home prices to go up, so instead of moving into home buying they're saving money for a downpayment, they're trying to improve their credit, he said.

The U.S. housing market is still adjusting to life without up to $8,000 in tax credits, which ended on April 30 and fueled spring sales at the expense of summer activity.

Many potential buyers are grappling with job loss or wage cuts, while sellers face a large pool of unqualified borrowers under more stringent lending guidelines, economists said.

The Federal Reserve on Tuesday took new steps to keep interest rates low to stimulate the economy, which it said has slowed in recent months.

Refinancings accounted for about 78 percent of all mortgage requests last week, continuing to far overshadow demand for loans to purchase homes.

The seasonally adjusted market index, which includes purchases and refinancings, climbed 0.6 percent last week, according to the MBA. The refi index rose 0.6 percent while purchase demand rose for the fourth straight week but by just 0.3 percent.

The average 15-year mortgage rate, meantime, also fell last week, from 4.03 percent to 3.95 percent, the lowest contract rate on record, the MBA said.

Affordability is just way too attractive for U.S. housing to enter a double-dip, said Greg Miller, chief economist at SunTrust Bank in Atlanta.

Many housing experts predict prices, which have already fallen roughly 30 percent from peaks set four years ago, to post a comparatively slim single-digit decline before stabilizing.

I don't know that we're bringing too many people out of rental housing, but folks who are willing to drop prices and sell have an incentive to do so now when purchasing something else can still be beneficial, he added.

California Mortgage