The average rate on a 30-year U.S. mortgage fell to its lowest level since early May, an encouraging trend for prospective homebuyers at a time when the U.S. housing market remains largely held back by elevated borrowing costs and rising prices.

The long-term rate fell to 6.77% from 6.81% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.86%.

Borrowing costs on 15-year fixed-rate mortgages, popular with refinancing home loans, also fell. The average rate dropped to 5.89% from 5.96% last week.

A year ago, it was 6.16%, Freddie Mac reported.

High mortgage rates can add hundreds of dollars a month in costs for borrowers and cut purchasing power. — Associated Press