Mortgage rates didn’t stay above 3 percent for long. After just one week, they slid back below that level.

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average dropped to 2.98 percent with an average 0.6 point. (Points are fees paid to a lender equal to 1 percent of the loan amount. They are in addition to the interest rate.) It was 3.02 percent a week ago and 3.07 percent a year ago.

Freddie Mac, the federally chartered mortgage investor, aggregates rates from around 80 lenders across the country to come up with weekly national averages. It uses rates for high-quality borrowers with strong credit scores and large down payments. Because of the criteria, these rates are not available to every borrower.

The survey is based on home purchase mortgages, which means rates for refinances may be higher. The price adjustment for refinance transactions that went into effect in December is adding to the cost. The adjustment, which applies to all Fannie Mae and Freddie Mac refinances, is 0.5 percent of the loan amount. That works out to $1,500 on a $300,000 loan.

The 15-year fixed-rate average fell to 2.26 percent with an average 0.7 point. It was 2.34 percent a week ago and 2.56 percent a year ago. The five-year adjustable rate average inched up to 2.54 percent with an average 0.3 point. It was 2.53 percent a week ago and 3 percent a year ago.

“Despite more inflationary pressures and strong economic data releases, mortgage rates fell this week,” said Matthew Speakman, a Zillow economist. “The muted reaction to the highest annual change in the core personal consumption expenditure price index in nearly three decades was the latest evidence that investors are buying into the idea that rising price pressures are transitory, and more accurate readings on inflation will come only after supply chain restrictions ease.”

The yield on the 10-year Treasury remained below 1.5 percent this week, closing at 1.45 percent on Wednesday. Long-term bond yields, particularly the 10-year yield, are one of the best indicators of where rates are headed, though less so lately. Yields were down this week, a somewhat unexpected slide given recent data on inflation.

Investors usually sell Treasurys when they think the economy will grow fast and face rising inflation, which erodes the value of bonds’ fixed payments. Instead, investors were buying bonds, sending yields down. It could be that investors believe higher inflation is temporary.

But strong demand for bonds also could be attributed in part to the end of the second quarter. Financial institutions and money managers tend to favor liquid assets (e.g., Treasurys) on their balance sheets at the end of a quarter. That puts downward pressure on yields. Some investors buy bonds around this time to match benchmark indexes, which are adjusted monthly to reflect the new debt the government has issued.

“We have had a tug of war on the bond market for some time now,” said Logan Mohtashami, a housing analyst with HousingWire. The June jobs report will be out Friday, “and we should be able to have strong enough job gains to get all the jobs lost from covid-19 [back] by September 2022 or earlier. However, the bond market already knows this, and still, we are at [1.45] percent. Keep a focus on the bond market on jobs Friday, not so much on the initial reaction to the report but where we close.”, which puts out a weekly mortgage rate trend index, found the experts it surveyed were divided on where rates are headed in the coming week. The majority (45 percent) said rates will stay about the same, 36 percent said they will go down and 18 percent said they will go up.

Elizabeth Rose, a sales manager at AmCap Mortgage, predicts higher rates.

“Mortgage bonds have been pretty steady lately with some improvement the past two weeks,” she said. “But now, bonds are facing a wall of resistance. This resistance has held strong in the recent past and it seems as though it would take a big surprise for bonds to bust above this resistance and continue improving. … As more people return to work, jobs being added, and the economy reopening, it is reasonable to anticipate mortgage rates rising.”

However, Gordon Miller, owner of Miller Lending Group, anticipates little change, especially because of the upcoming July Fourth holiday.

“Inflation talk will come and go, but it’s apparent the housing market is not ready for higher rates,” he said.

Meanwhile, last week’s higher rates caused mortgage applications to take a dive. According to the latest data from the Mortgage Bankers Association, the market composite index — a measure of total loan application volume — decreased 6.9 percent from a week earlier. The refinance index tumbled 8 percent, while the purchase index sank 5 percent. The refinance share of mortgage activity accounted for 61.9 percent of applications.

“Slightly higher mortgage rates have cooled demand for refinances, and low inventory and the steep rise in home prices are weighing on the purchase market,” said Bob Broeksmit, MBA president and CEO. “Homebuyer demand heading into the second half of the year remains very strong. Despite the recent slump in activity, MBA expects purchase originations to increase in 2021 to a record $1.7 trillion.”

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