Mortgage rates fell for the second straight week last week, and that helped boost refinance demand for the first time in a while. As a result, total mortgage application volume rose 5.5% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased to 3.16% from 3.24%, with points remaining unchanged at 0.34 (including the origination fee) for loans with a 20% down payment. The rate is now down 14 basis points in the past two weeks, but still 18 basis points higher than the same week one year ago.

Refinance demand, which is highly sensitive to weekly rate moves, rose 7% last week from the previous week. It was, however, 28% lower year over year. The refinance share of mortgage activity increased to 63.5% of total applications from 61.9% the previous week.

“Although overall activity remains close to January 2020 lows, homeowners acted on the decrease in rates,” said Joel Kan, an MBA economist. “Additionally, the average loan balance for a refinance application was the highest in a month.”

Mortgage applications to purchase a home increased 3% for the week but were 4% lower than the same week one year ago. The housing market is well into its slower season, and while demand is stronger than usual, homebuyers are still facing a lean and pricey market. The brief drop in rates may have brought some buyers back, but given how high the costs are today, it didn’t give them much more purchasing power.

Mortgage rates did drop slightly lower to start this week. They are now at the best levels since late September.