Mortgage rates last week dropped to the lowest level in a month, pushing more borrowers to refinance. Potential homebuyers, however, were not as enthused.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $806,500 or less, decreased last week to 6.37% from 6.42%, with points falling to 0.59 from 0.61, including the origination fee, for loans with a 20% down payment.

“The refinance index increased 4 percent, driven by a 6 percent increase in conventional refinances and a 12 percent increase in FHA refinance applications, as borrowers remain attentive to these opportunities to lower their monthly mortgage payment. VA refinances bucked the trend and were down 12 percent,” said Joel Kan, an MBA economist, in a release.

Kan noted that demand for adjustable-rate mortgages rose again.

“ARM applications increased 16 percent over the week, which pushed the ARM share to 11 percent, with the ARM rate more than 80 basis points lower than the 30-year fixed rate,” he added.