Mortgage rates eased this week, reversing three consecutive weeks of increases, as Federal Reserve policymakers weighed further stimulus measures that could include additional purchases of mortgage-backed securities that fund most U.S. mortgage loans.

Rates for 30-year fixed-rate mortgages averaged 3.59 percent with an average 0.6 point for the week ending Aug. 30, down from 3.66 percent last week and 4.22 percent a year ago, Freddie Mac said in releasing the results of its weekly Primary Mortgage Market Survey. Rates on 30-year fixed-rate mortgages hit an all-time low in Freddie Mac records dating to 1971 of 3.49 percent during the week ending July 26.

For 15-year fixed-rate mortgages, a popular refinancing option, rates averaged 2.86 percent with an average 0.6 point, down from 2.89 percent last week and 3.39 percent a year ago. Rates on 15-year fixed-rate mortgages hit a low in records dating to 1991 of 2.8 percent during the week ending July 26.

Rates on 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans averaged 2.78 percent with an average 0.6 point, down from 2.80 percent last week and 2.96 percent a year ago. Rates on five-year ARM loans hit a low in records dating to 2005 of 2.69 percent during the week ending July 19.

For 1-year Treasury-indexed ARM loans, rates averaged 2.63 percent with an average 0.4 point, down from 2.66 percent last week and 2.89 percent a year ago. Rates on one-year ARMs hit an all-time low in records dating to 1984 of 2.65 percent during the week ending Aug. 9.

A separate survey by the Mortgage Bankers Association showed demand for purchase loans was up a seasonally adjusted 1 percent from the week before during the week ending Aug. 24, with applications for refinancings falling 6 percent to the lowest level since May.

The Federal Reserve, which wound down a program in 2010 that kept mortgage rates low by buying up $1.25 trillion in mortgage-backed securities (MBS) guaranteed by Fannie Mae and Freddie Mac, is currently reinvesting principal payments on its $1 trillion holdings in Fannie and Freddie debt and MBS into agency-backed MBS.

While that’s helped keep mortgage rates at or near record lows, there’s some speculation that the Fed may announce a third round of quantitative easing, or "QE3."

At an annual economics symposium in Jackson Hole, Wyo., where Fed Chairman Ben Bernanke announced "QE2" in 2010, Dennis Lockhart, the head of the Federal Reserve Bank of Atlanta, told Reuters that it will be a close call as to whether further asset purchases are needed to boost the economy.

When members of the Fed’s Open Market Committee meet next Sept. 12-13, the question will be how much benefit such a move would provide, and what the costs would be in both the short and longer run, Lockhart said.

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