National mortgage rates continue to bounce around a volatile range. A jump in borrowing costs in the week ending August 7 caused refinance-related loans to reverse the prior week’s progress, sending demand for new loans down in the week, an industry survey said.

The weekly report from the Mortgage Bankers Association said the average rate for a 30-year loan jumped from 5.17% to 5.38%, shrinking demand for new loans. The 5.17% rate in the week before was a 4-week low.

The reversal in rates caused demand for refinance-related loans to fall 7.2% in the week, erasing the 7.2% gain it had seen in the previous week. The decline caused the Market Composite Index ― which tracks the volume of mortgage applications ― to fall 3.5% in the week.

However, compared to one year ago the Market Composite Index is up 16.1%, signifying that much has changed in recent months.

In contrast to mortgage demand, the Purchase Index actually rose 1.1% in the week, marking its third straight advance. The recent gains have been minor, however, so the 4-week gain is just 0.8%. But since late February purchases have risen almost 8%.

“The behavior of the four week moving average of the Purchase Index is consistent with the view that home sales hit bottom earlier this year and are now in a gradual recovery,” the report said.

Mortgage rates vary across the country but the state average is below 5.5% ― an historically low rate ― in all 50 states. According to a report from Zillow.com published yesterday, lenders in Washington offer the lowest mortgage rates with an average of 5.28%, while rates in Maryland and Wisconsin are currently the highest at 5.45%.

Many analysts believe mortgage rates could start to rise if the Federal Reserve decides to stop its program of purchasing long-term Treasuries as part of its exit strategy from an aggressive monetary policy. In recent months the central bank has scooped up close to $300 billion in government debt.

Laurence Meyer, a former Fed Governor, predicted last week that the Fed would announce an end to the program in the policy statement which is released this afternoon.

The FOMC “is unlikely to extend the life of these programs, unless, of course, either the economy or the financial markets take a significant turn for the worse,” Meyer wrote. “We therefore expect the FOMC to announce at its upcoming meeting that it will allow the Treasury purchase program to expire in mid-September.”