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NEW YORK, May 30 (Reuters) - Interest rates on U.S. 30-year fixed-rate mortgages fell below 4% for the first time since January 2018 in step with declining U.S. bond yields due to growing trade tension between China and the United States, Freddie Mac said on Thursday.

Thirty-year mortgage rates averaged 3.99% in the week ended May 30, down from 4.06% a week earlier and 4.56% a year ago, the mortgage finance agency said.

The average 15-year mortgage rate fell to 3.46% from 3.51% the week before. It was 4.06% a year earlier.

Interest rates on five-year adjustable mortgages averaged 3.60%, down from 3.68% the prior week and 3.80% from the year before.

While the U.S. economy is on relatively steady footing, Wall Street has wobbled on fears about a protracted trade conflict between the world's two biggest economies.

Jitters about flagging business activities around the world spurred a safe-haven stampede for longer-dated U.S. government debt, sending 10-year Treasury yields to 2.21% on Wednesday, their lowest level since September 2017.

Ten-year yields also fell below the interest rates on 3-month Treasury bills. This inversion of the yield curve has preceded every U.S. recession in the past 50 years.

“While economic data points to continued strength, financial sentiment is weakening with the spread between the 10-year and the 3-month Treasury bill narrowing as fears of the impact of the trade war with China grow," Freddie Mac's chief economist Sam Khater said in a statement.

Khater said cheaper borrowing costs should support the housing market.

Recent data suggest a cloudy picture of the housing industry.

Domestic new home sales hit a near 11-1/2-year peak in March before retreating in April.

Existing home sales, on the other hand, fell for a second consecutive home in April due primarily to a shortage of inventories, while pending home sales unexpectedly decreased last month.

(Reporting by Richard Leong Editing by Chizu Nomiyama and Jonathan Oatis)