(Bloomberg) — US mortgage rates posted the biggest drop in more than two years, offering homebuyers a slight reprieve from this year’s massive surge in borrowing costs.

The average for a 30-year loan declined to 5.10% from 5.25% last week, Freddie Mac said in a statement Thursday. That was the biggest decline since April 2020, but rates are still well above the 3.11% level at the end of last year.

While rates slipped for the second week in a row, their rapid rise over the past four months has started to take a toll on demand. New home sales, measuring signed contracts, dropped to the lowest level since the start of the pandemic lockdowns, according to government data released this week. A gauge of US pending home sales also decreased in April for a sixth straight month, data showed Thursday.

“Mortgage rates leveling off is a lifeline for prospective homebuyers already dealing with inflation and record-high listing prices, and welcome news for the housing market at large,” Joel Berner, Realtor.com’s senior economic research analyst, said in an email. “Dark and stormy is the current mood, but a period of steadier rates below recent highs will give buyers, sellers, and builders alike the time to adjust to the new financial environment.”

The Federal Reserve is raising interest rates to combat inflation, raising affordability concerns for buyers who are struggling to find properties. The median mortgage payment for new purchase applications in April was up 8.8% from a month earlier due to higher rates and rising home prices, according to Mortgage Bankers Association data released Thursday.

At the current 30-year average, a borrower with a $300,000 mortgage would pay $1,628 a month, roughly $346 more than at the end of last year.

The dip in rates will offer lower borrowing costs, but home prices have been on the rise for two years with a shortage of listings making it hard for potential buyers to crack the market. Economic uncertainty and the worsening affordability situation has raised questions about whether the housing boom will run out of steam.

“Mortgage rates decreased for the second week in a row due to multiple headwinds that the economy is facing,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Despite the recent moderation in rates, the housing market has clearly slowed, and the deceleration is spreading to other segments of the economy, such as consumer spending on durable goods.”

(Updates with pending home sales in third paragraph and analyst comment in fourth paragraph.)