After rising at the end of the year, mortgage rates dropped sharply last week. That drove demand from current homeowners hoping to save on their monthly payments, but it did little to excite potential homebuyers.

As a result, total mortgage application volume rose just 1.2% 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 ($647,200 or less) decreased last week to 6.42% from 6.58%, with points remaining at 0.73 (including the origination fee) for loans with a 20% down payment. One year ago, that rate was 3.52%.

“Mortgage rates declined last week as markets reacted to data showing a weakening economy and slowing wage growth. All loan types in the survey saw a decline in rates,” said Joel Kan, an MBA economist.

The drop in rates sparked a 5% increase in applications to refinance a home loan. Volume, however, was still 86% lower than the same week one year ago. Even with rates lower than their previous high of over 7% last fall, at the current rate just 270,000 borrowers could benefit from a refinance, according to Black Knight, a mortgage technology and analytics firm. A year ago, with the rate half what it is now, roughly 7 million borrowers could benefit.

Mortgage applications to purchase a home fell 1% for the week and were 44% lower than the same week one year ago. That was the lowest reading since 2014. Buyers today are not only contending with higher interest rates but falling supply. They are also seeing prices come down and may be waiting to see how low they go.

So far this week mortgage rates have moved in a narrow range. The market is eyeing the next release of the monthly consumer price index set for Thursday. If it shows inflation to be cooling even more, mortgage rates could drop further.