Mortgage rates continued to drop following April's positive inflation data that shows prices are moving in the right direction, according to Freddie Mac. 

The average rate for a 30-year fixed-rate mortgage dropped to 6.35% for the week ending May 11, according to Freddie Mac's Primary Mortgage Market Survey. That's down from the previous week when it averaged 6.39%. Mortgage rates remained above last year when the average was 5.3%.

The average rate for a 15-year mortgage was 5.75%, down from 5.76% the week before and up from 4.48% last year.

The Consumer Price Index (CPI), a measure of inflation, rose 4.9% year-over-year in April, a slowdown from the 5% increase in March, according to the Bureau of Labor Statistics (BLS). Although the rate is still above the Federal Reserve's 2% target rate, the consecutive month decrease supports the theory that inflation is moderating. 

Moderating inflation should support a Federal Reserve decision to ease off on further rate hikes this year, according to Freddie Mac Chief Economist Sam Khater.

"This week's decrease continues a recent sideways trend in mortgage rates, which is a welcome departure from the record increases of last year," Khater said. "While inflation remains elevated, its rate of growth has moderated and is expected to decelerate over the remainder of 2023. This should bode well for the trajectory of mortgage rates over the long-term."

If you are looking to buy a home, you can take advantage of lower mortgage rates and shop for the best rate on a loan. Visit an online marketplace like Credible to compare rates, choose your loan term and get preapproved with multiple lenders at once.

AUTO INSURERS PLAN FURTHER RATE INCREASES THIS YEAR – HERE'S HOW YOU CAN GET COSTS UNDER CONTROL

The recent break in mortgage rate increases helped to boost mortgage application activity according to the Mortgage Bankers Association's (MBA) seasonally adjusted index.

Mortgage applications increased 6.3% last week compared with the previous week. Refinance applications also rose 10% last week but remained more than 44% behind last year's pace. Purchase applications increased 5% last week but were still more than 30% below last year.

"Borrowers responded positively to lower mortgage rates last week, with both refinance and purchase applications posting strong gains," MBA President and CEO Bob Broeksmit said in a statement. "The decline in mortgage rates is good news for prospective homebuyers, but housing supply is still too low in many parts of the country. 

"Housing construction has slowed, and some would-be sellers are delaying decisions because of economic uncertainty and an unwillingness to give up their low-rate mortgage," Broeksmit said.

If you are ready to shop for a mortgage loan, you could get a better rate by looking at several lenders. Visit Credible to help you compare interest rates from multiple mortgage lenders and choose the one with the best rate for you.

MANY AMERICANS STILL OPTIMISTIC ABOUT HOMEBUYING DESPITE TOUGH ECONOMIC BACKDROP: TD BANK

Although mortgage rates have budged recently, they remain above last year's 5% average. Monthly payments in April were 28.1% higher than a year ago and were up 1.2% from a month ago, according to data from Candor Technologies.

"The recent interest rate hike from the Federal Reserve continues to keep the cost of homebuying elevated when compared to the same period one year ago," Sara Knochel, Candor Data & Analytics CEO, said in a statement. "However, we are also seeing the homebuyer's average income on the rise as well, which indicates more Americans may be picking up side income sources in order to finance their home purchase." 

Another way that buyers could compensate for the more expensive housing market is by cutting the amount they put towards a down payment, according to a realtor.com report.

Down payments fell in the first quarter of 2023 relative to the previous year and for the first time since the second quarter of 2020, according to the report.

Homebuyers may find a better mortgage rate by looking at several lenders. If you are ready to shop for a mortgage loan, visit Credible to help you compare interest rates from multiple mortgage lenders and choose the one with the best rate for you.

HERE'S WHY CONSUMERS' CREDIT SCORES GOT A BOOST IN MARCH: REPORT

Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.