Applications for a mortgage to purchase a home, however, did not bounce back, falling one percent on week.
"Mortgage application activity remained weak over the holiday period, with purchase applications almost twenty percent lower than at the same time last year," said Mike Fratantoni, chief economist for the Mortgage Bankers Association. "Other economic data is reflecting a strengthening economy, so this weakness is likely due to a combination of the increase in rates and still tight credit."
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Credit availability was little changed over the past month, according to another MBA report. Investors are continuing to fine-tune credit scores and loan-to-value formulas and debt-to-income measures in order to comply with new rules from the Consumer Financial Protection Bureau; those rules go into effect at the end of this week.
—By CNBC's Diana Olick; Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC