The demand for home loans fell again last week marking the sixth straight week in a row that home loan applications have dropped. This trend doesn’t at all bode well for the housing market, which had been starting to show some signs of stabilizing after having been in a severe slump for the past three years.

The demand for home loans dropped to a low that hasn’t been seen in 12 years. What makes this even more significant is that the interest rates on 30-year home loans also dropped to the lowest they’ve been in the past six months, too.

This information comes from the Mortgage Bankers Association. It released its numbers for the seasonally adjusted index of mortgage applications. This includes not only new purchase home loans, but also refinancing home loans. The index dropped 2.5 percent for the week that ended November 13 to an index of 611.7.

The U.S. housing market has been at the core of the current recession in the United States. The market is still tremendously vulnerable, and many people had hoped that intervention by the federal government would help to keep setbacks from happening.

One factor that may help is the expansion and extension of the home buyer tax credit. This is a positive thing overall, but many experts in the industry believe that it may still expire too early to have its full impact. It may not give enough time to get the market moving the way it should.

This tax credit was extended to April 30 of next year. The credit had been set to expire at the end of November, so this is excellent news for folks that have been unable to take advantage of the credit to this point. In addition, the administration added a credit for home owners that purchase a new residence of up to $6,500. They also increased the income limits, making the program available to more people. While papers have to be signed by April 30, those loans need to be closed by June 30.

Meanwhile, the cost of borrowing on 30-year fixed rate mortgages has dropped to an average of 4.83 percent. This is down 0.07 of a percent from the previous week, marking the lowest the rate has been since the middle of May. The all-time low for this rate was in March of this year, with a rate of 4.61 percent.

The average of mortgage applications over the past four weeks has show a decline, being down 1.2 percent overall from the previous four week period. Refinancing activity was also down, by about 1.4 percent.