After three straight weeks of declines, mortgage demand came crawling back, thanks to a drop in interest rates.

Total application volume rose 4.2% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

Refinances led the gains, rising 6% for the week. They were still 22% lower than the same week one year ago because so many borrowers already refinanced last fall, when rates hit record lows. The refinance share of mortgage activity increased to 61.7% of total applications from 60.4% the previous week.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased to 3.11% from 3.15%, with points increasing to 0.36 from 0.34 (including the origination fee) for loans with a 20% down payment.

“Treasury yields have slid because of the uncertainty in the financial markets regarding inflation and how the Federal Reserve may act over the next few months,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.

Applications for a mortgage to purchase a home increased 2% for the week but were 17% lower than a year ago. Homebuying has been slowing lately due to huge price gains and a low supply of homes for sale. Lower mortgage rates aren’t doing much to offset either of those factors.

Mortgage rates jumped to start this week as bond investors anticipate news from the Federal Reserve meeting Wednesday afternoon.

“Last week’s rate-friendly trend has run its course and markets are now gearing up for [Wednesday’s] policy announcement from the Fed. That took the form of a moderate move back toward higher rates,” said Matthew Graham, chief operating officer of Mortgage News Daily. “While the Fed is not yet ready to adjust its policy rate or change its bond-buying game plan, they may speak to the probabilities of those prospects in the future.”