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.

As a result, applications to refinance a home loan, which are most sensitive to weekly changes in interest rates, rose 4% for the week and were 81% higher than the same week one year ago, according to the Mortgage Bankers Association's seasonally adjusted index. The rate on the 30-year fixed was 15 basis points higher a year ago. A basis point is 0.01 percentage point.

"The re

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