(Reuters) -The interest rate for the most popular U.S. home loan dropped to 6.67% last week, the lowest rate since early April, triggering a rush of homeowners seeking to lock in cheaper financing on existing mortgages but doing relatively little to draw new homebuyers into the market. 

The average contract rate on a 30-year fixed-rate mortgage fell 10 basis points in the week ended August 8, the Mortgage Bankers Association said on Wednesday. Refinance applications jumped 23% to a four-month high.

But purchase applications rose just 1%.

The Federal Reserve has left short-term borrowing costs unchanged all year as U.S. central bankers worry the Trump administration's tariffs could push up on inflation that's already stuck above their 2% goal.

The still-elevated mortgage rates along with high and rising home prices have been discouraging homebuyers. Existing home sales dropped to a nine-month low in June. 

In recent weeks, however, a number of U.S. central bankers have voiced concerns about the labor market and signaled they are increasingly open to lowering interest rates.

Financial markets are betting the Fed will start cutting rates in September, especially after data released Tuesday showed year-over-year consumer inflation in July was 2.7%, no higher than it was a month earlier, despite a rise in goods prices that looked to be driven by higher import duties. 

Some Fed officials, including Kansas City Fed President Jeffrey Schmid, remain skeptical about the wisdom of cutting rates. There are still several important economic reports due before the Fed's September policy meeting, including on inflation and on the state of the job market, where job gains have cooled but the unemployment rate is at a relatively low 4.2%.

Mortgage rates fell substantially over the summer before the last time the Fed cut interest rates after a long holding period, in September 2024. At that time, a weakening labor market prompted a bigger-than-usual half-point reduction to its policy rate.