The 30-year fixed-rate mortgage (FRM) averaged 6.39% for the week of May 4, according to the results of Freddie Mac’s Primary Mortgage Market Survey.

Rates have ticked down 40 basis points from the prior week and are more than 1 percentage point higher than a year ago, when the 30-year FRM averaged 5.27%.

“This week, mortgage rates inched down slightly amid recent volatility in the banking sector and commentary from the Federal Reserve on its policy outlook,” says Sam Khater, Freddie Mac’s chief economist. “Spring is typically the busiest season for the residential housing market, and, despite rates hovering in the mix-6% range, this year is no different. Interested home buyers are acclimating to the current rate environment, but the lack of inventory remains a primary obstacle to affordability.”

The 15-year fixed-rate mortgage averaged 5.76% for the week of May 4, down from the prior week when it averaged 5.71% and up from the prior year, when it averaged 4.53%.

As rates softened, mortgage rate applications for the week ending May 5 increased 6.3% from the prior week, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. The seasonally adjusted purchase index increased 5% from the prior week. On an unadjusted basis, the purchase index increased 5.3% from the prior week but was 32% lower than the same week in 2022.

“Mortgage applications responded positively to a drop in rates last week, as the Fed signaled a potential pause at the current level for the federal funds rate in anticipation of inflation slowing and tightening financial conditions that will slow economic and job growth,” says MBA vice president and deputy chief economist Joel Kan. “Lower rates from week to week have helped buyers in the market, but limited for-sale inventory remains a challenge for many home buyers.”

Kan says refinancing activity increased to its highest levels since 2022, but he notes that only a small pool of borrowers can benefit from refinancing at current rate levels.

The adjustable-rate mortgage share of activity decreased to 6.8% of total applications, and the FHA share of total applications decreased to 12.1%, according to the MBA. The VA share of applications increased to 12.9% from 11.3% the week prior.