The borrowing cost on 30-year mortgages, the most widely held type of US home loan, averaged 3.96 percent in the week ended July 20. Last week, the average 30-year rate was 4.03 percent, which was the highest since 4.05 percent in the May 11 week, the mortgage finance agency said.

Treasury yields have scaled back since last Friday following a weak-than-forecast reading on the US consumer price index for June.

"Continued economic uncertainty and weak inflation data pushed rates lower this week," Freddie Mac's chief economist Sean Becketti said in a statement.

On Thursday, the benchmark 10-year Treasury yield fell to a three-week low at 2.243 percent after the European Central Bank stuck to its ultra loose monetary policy on concerns about low inflation in Europe.