Mortgage rates fell lower below 7% after promising inflation news and an update from the Federal Reserve, according to Freddie Mac’s latest data.

The 30-year, fixed-rate mortgage averaged 6.95% in the week ended June 13, down from 6.99% the previous week but higher than the comparable week this time last year when it stood at 6.69%, the mortgage finance giant said Thursday. The 15-year, fixed-rate mortgage averaged 6.17%. That’s lower than last week when it averaged 6.29% but slightly above a year earlier when it was 6.10%.

As of Wednesday afternoon, the current 30-year, fixed-rate mortgage had also decreased, settling at 6.97%. The current 15-year, fixed-rate mortgage was 6.38%, according to Mortgage News Daily.

It’s the second week in a row that rates have averaged below 7%, a welcome reprieve after nearly two months above that threshold. The ease in rates comes on the heels of new data showing inflation easing. The Fed also signaled that it would make at least one reduction in its federal funds rate this year, a move that should put downward pressure on mortgage rates.

Some analysts and executives expect the downward trend in mortgage rates to continue following these updates, according to a weekly survey from personal finance website Bankrate.

“Better inflation news from the Consumer Price Index and acknowledgment from the Fed of modest progress in inflation will help bring mortgage rates down,” Greg McBride, the website’s chief financial analyst, said.

“As the rate of inflation settles down, so will mortgage rates,” added Melissa Cohn, regional vice president of residential lender William Raveis Mortgage.

But other industry professionals remain wary, noting that although topline inflation numbers have come down, shelter inflation remains high and is growing.

“Shelter inflation, which measures rent and homeownership costs, increased showing that housing affordability continues to be an ongoing impediment for buyers on the house hunt,” Sam Khater, chief economist at Freddie Mac, said in a statement.

Despite that uncertainty, consumers are already taking advantage of easing mortgage rates.

In the week ended June 7, mortgage applications increased 15.6% on a seasonally adjusted basis compared to the previous week, according to the latest data from the Mortgage Bankers Association Market Composite Index, a measure of mortgage loan application activity, released Wednesday. Refinance applications surged 28% compared to the previous week while purchase applications climbed 9%.

It’s the first time the index has increased since May, a sign that borrowers are acting on lower rates, Bob Broeksmit, the industry group’s president and CEO, said in a statement.

Growth in housing supply is also responsible for the growth in applications, according to Mike Fratantoni, the industry group’s senior vice president and chief economist. Coupled with lower mortgage rates, that shift is good news for buyers.

“Multiple data sources are now indicating that home inventory levels, while still historically low, are up significantly from last year at this time,” he said. “This is good news for many prospective homebuyers who have been frustrated by the lack of homes on the market."

A June 3 report from mortgage data provider Intercontinental Exchange, for example, showed that nearly 90% of U.S. metropolitan areas had more homes for sale in April than at the same time in 2023. The report also found that in some markets, inventory of homes for sale has returned to pre-pandemic levels. While that's good news for buyers and sellers, it could have negative effects on landlords and developers as more renters have the option to enter the market as buyers.