Yields on mortgage bonds of the government-sponsored enterprises Fannie Mae and Freddie Mac tumbled Friday, likely pushing down interest rates on new residential loans after a recent jump.

Increases last week, spurred in part by a spike in Treasury yields, at one point were as big as any since 1984, before narrowing to only the most since late January. But on Friday, yields on Fannie's current-coupon 30-year fixed-rate mortgage bonds declined 0.21 percentage point, to 4.36% as of 11:30 a.m. in New York. That was still up from 3.94% on May 20.

Buying jumped Friday because yields rose high enough to draw demand, said Scott Simon, the head of mortgage bond investing at Pacific Investment Management Co. The Federal Reserve Board has been buying agency mortgage securities to bolster consumers with cheap refinancing and home prices with low borrowing costs; the recent increase undermined that effort.

"Mortgage rates are probably going to be down about 35 basis points today. That's unambiguously good for the homeowner," Simon said when yields were slightly lower.

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