(NEW YORK) -- Mortgage rates have dropped to their lowest level since May as negotiations between the United States and Iran ease financial markets.

The average interest rate on a 30-year fixed mortgage stands at 6.43%, down from last week's rate of 6.49%, Freddie Mac data on Thursday showed.

Still, mortgage rates register above their level before the war with Iran. Prior to the Middle East conflict in late February, a 30-year fixed mortgage clocked in at an average just below 6%.

“Rates did drop, which does provide some relief. But they’re still high,” Julia Fonseca, a professor at the Gies College of Business at the University of Illinois at Urbana-Champaign, told ABC News.

A decline in mortgage rates over recent weeks has come in response to a drop in oil prices and Treasury yields, some analysts told ABC News. The shift has partially reversed a trend that took hold after the Iran war broke out.

At that time, mortgage rates surged in response to a jump in U.S. Treasury yields, or the amount paid annually to a holder of government debt. The rise in bond yields is owed to fear of a renewed bout of inflation as oil prices climbed.

Since bonds pay a given investor a fixed amount each year, the specter of inflation risks higher consumer prices that would eat away at those annual payouts. In turn, bonds often become less attractive in response to economic turmoil. When demand falls, bond yields rise.

High bond yields make borrowing more expensive for average Americans, since 10-year Treasury rates influence the rates offered for a variety of loans, including mortgages.

Bond yields eased in recent weeks as negotiations unfolded between the U.S. and Iran, pushing down oil prices and softening inflation expectations, Ken Johnson, a real estate economist at the University of Mississippi, told ABC News. In turn, Johnson said, mortgage rates have fallen.

“The big driver has been the cooling of tensions in the Gulf,” Johnson told ABC News.

Despite the recent drop, mortgage rates remain higher than their pre-war level. Even more, mortgage rates stand well above their level as recently as 2022, when the average rate on a 30-year fixed mortgage came in below 5%.

Elevated mortgage rates have contributed to a phenomenon known as the "lock-in" effect.

Mortgage rates remain well above the rates enjoyed by most current homeowners, who may be reluctant to put their homes on the market and risk a much higher rate on their next mortgage.

“Rates are still pretty high relative to what they were a few years ago, but every drop in mortgage rates helps. This is not going to go all the way toward unlocking people. We might see this gradual unlocking as time goes by and as rates tick down,” Fonseca said.

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