By Lynn Adler

NEW YORK, May 13 (Reuters) - U.S. mortgage application demand slid to the lowest level since mid-March, driven by a drop in requests to refinance loans even as borrowing costs dipped toward record lows last week, the Mortgage Bankers Association said on Wednesday.

Applications for loans to buy homes rose marginally in the week ended May 8, holding slightly elevated levels in the midst of the keenly watched spring selling season.

U.S. housing continues to stumble in its deepest slump since the Great Depression.

But near record-low mortgage rates and a 30 percent price drop by some measures from the 2006 peak are luring buyers -- mostly those who benefit from a first-time buyer federal tax credit and those secure in their jobs.

The Mortgage Bankers Association said its applications index that includes purchase and refinance loans fell 8.6 percent to a seasonally adjusted 895.6 last week.

While refinance applications fell 11.2 percent to 4,588.6, the lowest since mid-February, the trade group's purchase loan index climbed 0.5 percent to 265.7. The last time purchase requests were higher was in the first week of April.

Borrowing costs bumped around near record lows.

The average 30-year mortgage rate slipped 0.03 percentage point to 4.76 percent and hovered slightly above the low of 4.61 percent set in late March.