After holding steady for a month, mortgage rates plunged to their lowest levels in nearly three years this week.

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average tumbled to 3.49 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount and are in addition to the interest rate.) It was 3.58 percent a week ago and 4.54 percent a year ago. In less than a year, the 30-year fixed rate has fallen more than 125 basis points. (A basis point is 0.01 percentage point.) It was 4.75 percent in December.

The 15-year fixed-rate average dropped to 3 percent with an average 0.6 point. It was 3.06 percent a week ago and 3.99 percent a year ago. The five-year adjustable-rate average dipped to 3.3 percent with an average 0.4 point. It was 3.31 percent a week ago and 3.93 percent a year ago.

“Mortgage rates fell further over the last seven days, reaching fresh three-year lows after manufacturing data confirmed that uncertainty around the globe is directly affecting the U.S. economy,” said Matthew Speakman, a Zillow economist.

The U.S. manufacturing sector contracted last month for the first time in three years, according to the IHS Markit industry report. The Manufacturing Purchasing Managers’ Index sank to its lowest level since September 2009, and new export orders retreated at their fastest pace in a decade.

“The contraction was the latest sign that the U.S.-China trade war is doing real damage to the economy – indeed, most survey respondents noted that slowing global trade is forcing them to limit their output,” Speakman said.

The weak manufacturing data along with concerns over Brexit and a stalemate in U.S.-China trade talks rattled the stock market and dragged down the yield on the 10-year Treasury, which fell to 1.47 percent this week, its lowest level since July 2016.

“Looking ahead, more turbulence for mortgage rates is likely to come, as the markets digest major developments emerging from Hong Kong and the U.K., as well as the August jobs report, which is slated for Friday,” Speakman said. “The labor market has been a pillar of strength for the economy for many months, so a weak report would surely alarm investors and further depress already-low mortgage rates.”

Bankrate.com, which puts out a weekly mortgage rate trend index, found that half of the experts it surveyed expect rates to move lower in the coming week.

“It’s no longer just the inverted yield curve sending economic warning signals, but now a contraction in the manufacturing sector,” said Greg McBride, chief financial analyst at Bankrate.com. “The consumer remains strong, but as worries mount, this will keep the downward pressure on bond yields and mortgage rates.”

Meanwhile, a slowdown in refinances caused mortgage applications to dwindle. According to the latest data from the Mortgage Bankers Association, the market composite index – a measure of total loan application volume – decreased 3.1 percent from a week earlier. The refinance index fell 7 percent from the previous week, while the purchase index rose 4 percent.

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

“Mortgage applications decreased 3.1 percent last week, as a modest gain in purchase activity was offset by a pullback in refinances,” said Bob Broeksmit, MBA president and chief executive. “Despite a leveling off in applications in recent weeks, refinances were still up 152 percent from last year, and purchase applications were 5 percent higher. With rates at levels not seen in nearly three years, we expect a 15 percent increase in mortgage originations in 2019.”

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