The average for a 30-year, fixed loan was 6.46%, down from 6.49% last week, Freddie Mac said

The average rate for a 30-year mortgage dropped to its lowest point in 15 months, providing much-needed relief for homebuyers in a challenging housing market. Freddie Mac reported on Thursday that the rate fell to 6.46%, down from 6.49% the previous week. A year ago, the rate was significantly higher at 7.23%.

This week’s average rate is the lowest since mid-May of last year when it stood at 6.39%.

For homeowners looking to refinance, the 15-year fixed-rate mortgage also saw a dip, with the average rate falling to 5.62% from 5.66% last week. A year ago, the 15-year rate was 6.55%, according to Freddie Mac.

Mortgage rates are expected to continue declining through the year, as signs of cooling inflation and a softer job market have raised expectations that the Federal Reserve may reduce its benchmark interest rate at its upcoming meeting, which would mark the first such cut in four years.

"Although mortgage rates have remained relatively flat in recent weeks, softer economic data suggests rates will gently decline by year’s end," said Sam Khater, Freddie Mac’s chief economist.

The average rate for a 30-year mortgage hit a 23-year high of 7.79% in October but has mostly stayed around 7% this year. However, this month saw the biggest rate drop in over a year, bringing the average down to about 6.5%.

The recent dip in mortgage rates has led to a 23% increase in applications for refinancing loans compared to last month, as reported by the Mortgage Bankers Association. However, applications for home purchase loans remain sluggish.

"We believe rates will need to fall by another percentage point to spur significant buyer demand," Khater added.

High mortgage rates, which can add substantial costs for borrowers, have kept many potential homebuyers out of the market, prolonging the housing downturn into its third year.