India, Aug. 21 -- Mortgage rates fell slightly last week despite a big jump in bond market volatility. The average 30-year fixed mortgage rate was 6.65% this week through Wednesday, down from 6.67% a week earlier, according to Freddie Mac. The small drop came during a very unstable week for the bond market. Long-term US government bond yields moved sharply as investors worried about inflation and the country's growing budget deficit.

The 30-year Treasury yield reached its highest level since 2007. Long-term government bond yields briefly moved above 5.3% on Tuesday, their highest level in 19 years, as investors became more concerned about inflation and the US fiscal deficit, according to Yahoo Finance. The Treasury then stepped in to sup...