Demand for U.S. home loans rose to a six-week high on a mini refinance wave, with borrowers pushing to lock in rates before they climb later this year, the Mortgage Bankers Association said on Wednesday,

Applications to buy homes and refinance loans jumped last week to mid-December levels as average 30-year mortgage rates held near 5 percent.

The industry group's mortgage index jumped 21 percent last week, fueled by a 26.3 percent leap in demand for refinancing as purchase loan requests increased 10.3 percent.

The 30-year mortgage rate dipped 0.01 percentage point to 5.01 percent.

But this borrowing cost was 0.40 percentage point above the record low set last March and seen headed higher throughout the year.

Rates continue to hover around 5 percent, quite low by historical standards, but are well above the record lows seen in 2009 and hence are not generating substantial refi volume, said Michael Fratantoni, MBA's vice president of research and economics.

Last spring when mortgage rates hit rock bottom, the index for refinance applications was more than double its current level.

Nonetheless, as the U.S. housing market claws its way out of the worst crash since the Great Depression there are increasing signs that the important spring selling season could be relatively healthy.

Affordability remains high with mortgage rates still historically low and average home prices plunging about 30 percent from 2006 peaks before stabilizing since last summer.

The government's bonus to first-time and move-up buyers via a tax credit remains in place for several more months, luring buyers who have been sitting on the sidelines waiting for some signs of stability.

Qualified borrowers who sign purchase contracts by April 30 and close on loans by the end of June can get an $8,000 first-time buyer credit or $6,500 move-up credit.

Each set of housing data brings with it the debate about whether this key segment of the U.S. economy can sustain once the government incentives disappear.

A modest December rise in pending sales of existing homes, which are based on signed contracts, after a steep November drop suggested that the housing rebound would come in fits and starts.

I do think the housing recovery in the U.S. still has legs and is firmly in tact, said Ian Pollick, economics strategist at TD Securities in Toronto. There's a lot of pent up demand in the system right now, there are a lot of really really good deals.

The rise in mortgage rates is seen as gradual this year with the Federal Reserve committing to keeping interest rates low for an extended period.

One of the wild cards is the pace at which banks start putting foreclosed properties up for sale. Those sales are also expected to be measured, to prevent a second price swoon that results in a double-dip for housing.

Taken as a whole I have a big thumbs up for the housing market, said Pollick. I really do think that the recovery is sustainable and I really do think that we've seen the worst in the rearview mirror.