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updated 6/16/2010 3:03:24 PM ET 2010-06-16T19:03:24

The number of customers applying for mortgages jumped last week, a sign that the market could be stabilizing after dropping off sharply last month.

Overall applications were up nearly 18 percent from a week earlier, the Mortgage Bankers Association said Wednesday. Applications to refinance home loans were up 21 percent to the highest level since May 2009. That's because buyers have been taking advantage of near-record-low mortgage rates.

Refinances made up nearly 75 percent of all mortgage activity. That's up from 72 percent a week earlier.

New mortgages taken out to purchase homes increased for the first time in six weeks, rising 7 percent. That's an encouraging sign for the housing market, as applications had dropped off sharply when federal tax credits expired.

First-time buyers were eligible for a tax credit of up to $8,000. Current owners who bought and moved into another home could qualify for a credit of up to $6,500. Buyers had until April 30 to get a signed sales contract and until June 30 to complete the sale.

Since the tax credit expired, "we've flattened out, but I would not expect a real robust rebound," said Michael Fratantoni, vice president of research and economics at the trade group.

He expects home sales to fall about 10 percent from the second quarter to the third. He forecasts buyers will purchase about 5.2 million previously occupied homes this year, up slightly from a year earlier.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 4.71%
$30K home equity loan FICO 5.26%
$75K home equity loan FICO 4.70%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.42%
13.42%
Cash Back Cards 17.94%
17.94%
Rewards Cards 17.15%
17.14%
Source: Bankrate.com