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Mortgage rates are still higher than a year ago. Pexels

Mortgage rates fell for the fourth time in five weeks, responding to lower Treasury yields as inflation expectations soften.

The average 30-year fixed rate dropped to 7.37% in the week ended Nov. 24, the lowest in 10 weeks, the Mortgage Bankers Association said Wednesday. The rate was at 7.41% the week before. Demand for mortgages rose 0.3%.

"Rates have declined more than 50 basis points over the past six weeks, which has helped to spur a small increase in purchase applications, but activity last week was still around 20% lower than a year ago," Joel Kan, MBA's vice president and deputy chief economist said in a statement.

"The purchase market remains depressed because of the ongoing, low supply of existing homes on the market. Similarly, refinance activity will likely be muted for some time, even with the recent decline in rates, as many borrowers locked in much lower rates in 2020 and 2021."

Mortgage rates are directly related to expectations for inflation and Treasury yields, which are now the lowest in more than two months.

Yields fell after Federal Reserve officials signaled more optimism on inflation. On Tuesday, Fed Governor Christopher Waller signaled that the key interest rates could be lower in the months ahead if inflation continues to slow.