Mortgage rates have dropped for the third consecutive week, contributing to increased demand from both homeowners and home buyers. Total mortgage application volume rose by 7.9% last 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, $832,750 or less, decreased to 6.35% from 6.42%, and points for loans with a 20% down payment decreased to 0.61 from 0.88.