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Both the Market Composite Index and the Refinancing Index increased in the week ending Jan 29, the Mortgage Bankers Association said.

Mortgage activity bounced back after a slow week with interest rates hovering near 5 percent for long-term contracts, said Michael Fratantoni, MBA vice president of research and economics, who predicted rates will rise over the next few months as the Federal Reserve winds down its purchases of mortgage-backed securities.

During the week, the average interest rate for 30-year, fixed-rate mortgages fell from 5.02 percent to 5.01 percent with points rising from 1 to 1.04, the organization said.

Rates for the average 15-year, fixed-rate mortgage fell from 4.34 percent to 4.33 percent. Points in 15-year, fixed-rate mortgages rose from 1.14 to 1.17.

For one-year adjustable rate mortgages, the average terms dropped from 6.84 percent interest and 0.33 points to 6.7 percent interest with 0.34 points, the MBA said.

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