Mortgage rates continued their retreat, helped by volatility in the financial markets and weakened inflation expectations.

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average slipped to 4.62 percent with an average 0.4 point. Points are fees paid to a lender equal to 1 percent of the loan amount. It was 4.63 percent a week ago and 3.94 percent a year ago. The 30-year fixed rate has fallen 32 basis points the past five weeks. A basis point is 0.01 percentage point.

The 15-year fixed-rate average remained the same as last week, holding steady at 4.07 percent with an average 0.4 point. It was 3.38 percent a year ago. The five-year adjustable rate average dropped to 3.98 percent with an average 0.3 point. It was 4.04 percent a week ago and 3.39 percent a year ago. This is the first time since late September that the rate for the 5-year ARM is below 4 percent.

"Big losses in stock markets and softened inflation expectations due to rapidly falling oil prices combined to push rates lower," said Aaron Terrazas, senior economist at Zillow. "Unexpectedly strong existing home sales data provided a welcome salve for a housing market that has been a sore spot for the overall economy in 2018, at least temporarily delaying fears that a softening housing market could herald looming weakness. The week between Christmas and New Year's is historically very quiet in financial markets, and volatility can be magnified by low trading volumes. We don't expect meaningful rate movement over the holidays, but the outlook for 2019 suggests, if nothing else, an increasingly uncertain path."

The Federal Reserve raised its benchmark rate again this week, the fourth increase this year. The Fed doesn't set mortgage rates, but its decisions influence them. Although Fed Chairman Jerome Powell expressed confidence that the economy is "healthy," he acknowledged that it appears to be slowing. He said there is a "fairly high degree of uncertainty" about what the central bank will do in the coming year.

"The Fed's comments make clear that central bankers are in the process of resetting market expectations for 2019," Terrazas said. "If economic data come in strong, we should expect a steady path of hikes in 2019. But if macro data turn out surprisingly weak, then the Fed is likely to pause."

Bankrate.com, which puts out a weekly mortgage rate trend index, found nearly all the experts it surveyed say rates will go down in the coming week.

Meanwhile, economic uncertainty is causing borrowers to stay on the sidelines. Mortgage applications were down, according to the latest data from the Mortgage Bankers Association. The market composite index a measure of total loan application volume decreased 5.8 percent from a week earlier. The refinance index fell 2 percent from the previous week, while the purchase index dropped 7 percent.

The refinance share of mortgage activity accounted for 43.5 percent of all applications.

"Fewer borrowers [were] looking to refinance their mortgage or purchase a home," said Bob Broeksmit, MBA president and CEO. "Purchase applications led the decline ..., but the year-over-year trend was more favorable, with activity up 2 percent. Lack of affordable inventory, this year's higher rates and prices, and stock market volatility are all weighing on prospective buyers' psyches at the end of 2018."