Image by Nick Youngson

(AP) — Average long-term U.S. mortgage rates fell slightly this week, after rising to their highest level in three years last week.

The average rate on a 30-year loan declined to 3.89% this week from 3.92% the previous week, mortgage buyer Freddie Mac reported Thursday. A year ago, the long-term rate was 2.97%.

The average rate on 15-year, fixed-rate mortgages, popular among those refinancing their homes, ticked down to 3.14% from 3.15% one week earlier.

It stood at 2.34% a year ago.

The Federal Reserve has signaled that it would begin the first in a series of interest rate hikes in March, reversing pandemic-era policies that have fueled hiring and growth but also contributing to inflation levels not seen since the early 1980s.

The Labor Department reported earlier this month that consumer prices jumped 7.5% last month compared with 12 months earlier, the steepest year-over-year increase since February 1982. Higher costs for nearly everything have wiped out Americans’ pay raises, reinforcing the Federal Reserve’s decision to begin raising borrowing rates across the economy.

Home prices are up even more, climbing about 14% in the past year and as much as 30% in some cities. Available housing has been limited since before the pandemic began in 2020, and higher prices and rising interest rates will make securing a new home even harder.

On Wednesday, the Mortgage Bankers Association said that applications for mortgages fell more than 13% last week from the previous week, the lowest level since December of 2019.