Demand for loans to purchase U.S. homes sunk to a 13-year low last week, and refinancing demand also slid despite near record-low mortgage rates, the Mortgage Bankers Association said on Wednesday.

Requests for loans to buy homes dropped 3.1 percent in the week ended July 9, after adjusting for the Independence Day holiday, to the lowest level since December 1996, the industry group said.

Refinancing applications fell 2.9 percent, and the mortgage market index that reflects total loan demand also fell 2.9 percent.

Average 30-year mortgage rates edged up 0.01 percentage point to 4.69 percent, but were near the record low of 4.61 percent set in March 2009, based on MBA records dating back to 1990.

Rock-bottom borrowing costs are helping borrowers with pristine credit to buy and those who still have equity in their homes to refinance.

But high unemployment and foreclosures remain major hurdles, and worries that prices could dip further are also keeping many potential buyers on the sidelines.

The April 30 expiration of homebuyer tax credits has also sapped summer purchasing activity. Buyers had raced to get in under the gun for the tax incentives this spring, and demand for loans to buy homes has fallen in nine out of the 10 weeks since the credit expired.

Refinancings accounted for 78.7 percent of all applications last week, the same as the prior week, the MBA said.

Talk has surfaced of a double-dip in U.S. housing, though most economists doubt a second leg down would be nearly as severe as the first.

It's sort of a self-fulfilling prophecy, but if there's going to be a double-dip you might as well stay on the sidelines as opposed to coming in to buy, said Taylor Woods, president of Genpact Mortgage Services in Irvine, California, a unit of Genpact Limited .

With as much turmoil as there is around loans that need to be modified, short sales, foreclosures -- all of those signs really indicate to buyers and investors that there will be better prices come tomorrow, he said.

Prices have toppled about 30 percent, on average, from their peaks four years ago, according to Standard & Poor's/Case-Shiller indexes. Most estimates are for additional single-digit declines.

If there's one part of the economy that might suffer some sort of a double-dip it might come out of the housing market, said Cam Albright, economic research director and portfolio manager at Wilmington Trust Investment Management in Wilmington, Delaware.

Housing economists look for the autumn months to tell the story once the ripple effects of the expired tax incentives are in the past.

There's been an awful lot of demand shifted forward by the first-time homebuyers credit, Albright said. Once we get into the fall, maybe even sooner, some of that will begin to smooth out.

(Editing by Leslie Adler)