LOS ANGELES (AP) — The average rate on a 30-year mortgage dipped to just below 7% this week, little relief for prospective homebuyers already facing the challenges of rising housing prices and a relatively limited inventory of homes on the market.

The rate fell to 6.99% from 7.03% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.71%.

Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also eased this week, lowering the average rate to 6.29% from 6.36% last week. A year ago, it averaged 6.07%, Freddie Mac said.

Mortgage rates are influenced by several factors, including how the bond market reacts to the Federal Reserve's interest rate policy and the moves in the 10-year Treasury yield, which lenders use as a guide to pricing home loans.

Yields eased this week following economic data showing slower growth. Signs that the economy is cooling can drive inflation lower, which could persuade the Federal Reserve to lower its short-term interest rate from its highest level in more than two decades.

The Fed, which is scheduled to hold its next policy meeting next week, has maintained it doesn't plan to cut interest rates until it has greater confidence that price increases are slowing sustainably to its 2% target. Until then, mortgage rates are unlikely to ease significantly, economists say.

"Overall, we anticipate inflation will continue to slow and will allow mortgage rates to decrease to around 6.5% by the end of 2024, early 2025," said Ralph McLaughlin, senior economist at Realtor.com.

The average rate on a 30-year mortgage remains near a two-decade high, adding hundreds of dollars a month in costs on a home loan, limiting homebuyers' purchasing options.

Elevated mortgage rates dampened home sales this spring homebuying season. Sales of previously occupied U.S. homes fell in March and April as home shoppers contended with rising borrowing costs and prices.

As rates have ticked higher, so have the monthly payments home shoppers need to take on when applying for a mortgage.

The national median monthly payment listed on home loan applications was $2,256 in April, a 2.5% increase from the previous month and 6.8% higher than what it was a year earlier, according to data from the Mortgage Bankers Association.