Mortgage rates dropped last week, but it wasn’t enough to spur mortgage demand.

The market composite index, a measure of mortgage loan application volume, declined 0.8% for the week ending November 25 after rising 2.2% from the previous week, according to the Mortgage Bankers Association. The index fell by a whopping 67.8% compared to the same week in 2021.

Purchase applications were up 4% last week compared to the previous week, but were down by 41% year over year. Meanwhile, the demand for refinances dropped 13% last week and plummeted 86% on an annual basis.

“Mortgage rates declined again last week, following bond yields lower,” said Joel Kan, MBA’s vice president and deputy chief economist. “The 30-year fixed mortgage rate decreased to 6.49% and has now fallen 57 basis points over the past four weeks. Additionally, mortgage rates for most other loan types declined,” he said.

MBA estimates the average contract 30-year fixed-rate mortgage for conforming loans ($647,200 or less) fell to 6.49% from the previous week’s 6.67%. At its recent peak about a month ago, rates reached 7.16%.

Jumbo mortgage loans (greater than $647,200) marginally rose last week to 6.35% from 6.30% the week prior, the MBA said. The average contract interest rate for 5/1 ARMs decreased to 5.48% from 5.78% the previous week. The ARM share of activity rose to 9% of total applications.

Mortgage rates, which have been trending up with the Federal Reserve‘s interest rate hike, started falling following a lower-than-expected consumer price growth in October. The consumer price index (CPI) rose by 7.7% year over year, marking the smallest 12-month increase since the year ending in January 2022.

“The economy here and abroad is weakening, which should lead to slower inflation and allow the Fed to slow the pace of rate hikes,” Kan said. 

The report shows the share of refis decreased to 26.1% of total applications from 28.4% from the previous week.

The Federal Housing Administration share of total applications declined to 12.2% from 13.4% the week prior. The Veterans Affairs (VA) share of total applications rose to 11.2% from 10.5%, and the United States Department of Agriculture (USDA) share marginally decreased to 0.5% from 0.6% during the same period. 

The survey, conducted weekly since 1990, covers 75% of all U.S. retail residential mortgage applications.