A couple are shown a property for sale in Newport Beach, California.

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Another drop in mortgage interest rates continued to confound expectations, but current homeowners saw a clear path to savings.

Mortgage application volume rose 2.8 percent last week, all thanks to refinances. The Mortgage Bankers Association’s seasonally adjusted weekly index remains 12 percent lower compared with a year ago, when rates were slightly lower.

Refinance applications surged again, rising 9 percent for the week, as rates ticked lower for the second week in a row. Refinance volume, however, is nowhere near where it was a year ago – 27 percent lower — because rates were even lower last year, and so many people thought that was their last chance to take advantage before rates went up.

“From a borrower perspective, rates held steady at seven-month lows last week providing some borrowers an opportunity to refinance,” said Joel Kan, an MBA economist. “Over the last two weeks refinance applications have increased 13 percent and the average loan size increased to its largest since September 2016, reflecting the tendency for jumbo borrowers to be more sensitive to rates than those with smaller loan balances.”

Homebuyers are not seeing the same benefit from low rates, given fast-rising home prices and weakening affordability. Mortgage applications to purchase a home fell 3 percent for the week but are close to 8 percent higher than they were one year ago. Demand is very strong for housing, but tight supply continues to thwart potential buyers and keep a strong burner under prices.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $424,100 or less decreased to 4.13 percent from 4.14 percent, with points increasing to 0.35 from 0.34, including the origination fee, for 80 percent loan-to-value ratio loans.

Mortgage rates didn’t move much at the start of this week, despite a slight increase in the yield on the 10-year Treasury bond, which mortgage rates loosely follow. Wednesday’s interest rate announcement from the Federal Reserve could cause mortgage rates to move, but not necessarily higher. Mortgage rates don’t follow the Fed precisely, but are impacted by its view of current economic conditions.

“While a rate hike from the Fed is a foregone conclusion, markets can still react forcefully to any changes in the Fed’s rate hike outlook,” said Matthew Graham, chief operating officer of Mortgage News Daily. “That makes this afternoon the most obvious staging area for potential volatility in rates in the short term.”