U.S. mortgage rates dropped back below 7% for the first time in a month, spurring an increase in applications for home purchases.

The contract rate on a 30-year fixed mortgage decreased 18 basis points, the biggest decline in nearly three months, to 6.84% in the week ended March 8, according to Mortgage Bankers Association data released Wednesday.

The MBA’s index of mortgage applications for home purchases increased 4.7% to a four-week high of 147.7.

Though mortgage rates are down from their peak in October, when they reached the highest levels since 2000, they are still more than twice as high as in 2021.

While housing demand has stabilized, a sustained drop in rates would help bring more prospective buyers off the sidelines.

The MBA’s overall index for mortgage applications, which tracks both home purchases and refinancing, climbed 7.1% last week to a four-week high.

The measure for refinancing rose 12.2%, the most in five weeks.

The MBA survey uses responses from mortgage bankers, commercial banks and thrifts and has been conducted weekly since 1990.

The data covers more than 75% of all retail residential mortgage applications in the U.S.