Mortgage rates retreated this week after the services sector reported its slowest growth rate in three years.

According to data released Thursday by Freddie Mac, the 30-year fixed-rate average fell to its lowest level in a month, dropping to 3.57%, with an average 0.6 point. (Points are fees paid to a lender equal to 1% of the loan amount and are in addition to the interest rate.) It was 3.65% a week ago and 4.90% a year ago.

The 15-year fixed-rate average sank to 3.05%, with an average 0.5 point. It was 3.14% a week ago and 4.29% a year ago. The five-year adjustable rate average slipped to 3.35%, with an average 0.3 point. It was 3.38% a week ago and 4.07% a year ago.

“Last week’s full slate of economic news was highlighted by Thursday’s larger-than-expected decline in a widely watched indicator of the service sector, pushing rates down sharply,” said Matthew Speakman, a Zillow economist. “The news showed that a slowing manufacturing sector has begun to negatively affect the larger services sector, evidence that the economy is facing stronger resistance than previously estimated. ... It’s likely that larger swings for mortgage rates are on the horizon as key consumer-related data releases – consumer sentiment on Friday and retail sales next Wednesday – are on deck.”

Weaker-than-expected economic data and trade tensions drove down mortgage rates but this week’s announcement by Federal Reserve Chair Jerome Powell could have a more profound effect on rates. Powell said the central bank will resume purchases of Treasurys but noted, “This is not QE.”

When the financial crisis hit in 2008, the Fed bought up mortgage-backed securities as well as long-term Treasurys in an effort to increase the availability of credit for home purchases and prop up the economy. The large-scale purchases of bonds were known as quantitative easing, or QE. Earlier this year, the central bank began selling off its holdings because the economy was growing at a healthy rate. With the Fed once again growing its balance sheet, mortgage rates could be affected.

Dick Lepre, a senior loan officer at RPM Mortgage in San Francisco, says the bigger issue is that mortgage rates have not been moving in harmony with Treasurys. The yield on the 10-year Treasury slipped to 1.52% on Friday before climbing back up to 1.59% on Wednesday.

“This is likely due to the fact that Treasurys have gotten first dibs on depleted excess reserves, meaning fewer bids for GSE debt,” he said. “Fed Chairman Powell recognized this and we will see excess reserves pumped back up soon. That should ease mortgage rates.”

Bankrate.com, which puts out a weekly mortgage rate trend index, found that more than half of the experts it surveyed say rates will remain about the same in the coming week.

“There’s a lot of noise with the China trade deals, Brexit and the Fed minutes,” said Logan Mohtashami, a senior loan officer at AMC Lending Group in Irvine, California. “However, until we break either below 1.43% or above 1.94% on the 10-year yield action, we have a short range for rates to work within the data. As always, keep an eye out on weekly PMI data and world trade data.”

Meanwhile, refinances lifted mortgage applications last week. According to the latest data from the Mortgage Bankers Association, the market composite index – a measure of total loan application volume – increased 5.2% from a week earlier. The refinance index jumped 10%, while the purchase index edged down 1%.

The refinance share of mortgage activity accounted for 60.4% of all applications.

“Mortgage applications increased 5.2% last week, as a 10% jump in refinances offset a modest decline in purchase activity,” said Bob Broeksmit, MBA president and chief executive. “Today’s low mortgage rates are a stark contrast to what we saw last fall, which is why refinances were 163% higher than a year ago, and purchase activity was up 10%. Homeowners and prospective buyers continue to be enticed by these favorable borrowing costs.”

The MBA also released its mortgage credit availability index this week that showed credit availability increased in September. The MCAI rose 0.9%, to 183.4, last month. An increase in the MCAI indicates that lending standards are loosening, while a decrease signals that they are tightening.

“Credit availability increased slightly in September, driven by a 5% increase in the supply of jumbo loans,” Joel Kan, an MBA economist, said in a statement. “The jumbo index, which grew from a combination of lower credit score requirements, non-QM loans, and investor products, is now at a record high since tracking began in 2011. Meanwhile, the trend of tightening credit availability in conforming and government programs continued over the past few months, as both indices decreased.”