The 30-year fixed-rate mortgage averaged 5.91% this week, according to Freddie Mac’s weekly rates survey. That’s down from last week’s 5.97% and last year’s 6.96% average.

Nationally, the 30-year was highest in the North Central states at 6.0%, while the lowest was in the West with 5.85%.

“Market concerns over weak economic indicators and an increased risk of war in the Middle East pushed mortgage rates even lower this week,” said Frank Nothaft, chief economist at Freddie. “That and falling stock prices raised investor appeal for U.S. Treasury Bonds, which in turn, allowed most interest rates to drift even lower.”

The average for the 15-year was 5.31% this week, a decrease from last week’s 5.36%. A year ago, the 15-year averaged 6.44%. The one-year Treasury-indexed adjustable-rate mortgages (ARM) averaged 3.93%, also down from last week’s 4.03%. The average ARM during the same time last year was 5.10%.

“Last month, mortgage rates averaged the lowest on record in Freddie Mac’s survey, which spurred a flood of new housing construction, the most since June 1986,” Nothaft said. “If mortgage rates continue to be this low, 2003 should be a remarkable year for housing.”

The Mortgage Bankers of America’s (MBA) weekly mortgage loan application index found that applications decreased to 1100.3 the week ending Jan. 17 from 1154.3 the previous week. The index, which reports a week behind Freddie’s rate survey, came in at 723.4 during the same time last year.

Refinancing activity represented 75.7% of total applications, decreasing from 77.7% the previous week. Refis represented 59.9% of applications last year during the same time.

The mortgage experts polled in Bankrate.com’s weekly survey are uneven about what rates will do over the next 30 to 45 days, but the majority cast a vote for “down” — 57% said rates will fall, 7% said they’ll go up, and 36% said they’ll remain the same, within 2 bps.

Phil Schneider said to Bankrate.com that global uncertainty seems to be increasing.

“Market participants prefer certainty to uncertainty. Although bond yields are already at record lows, we believe this market uncertainty will translate into lower interest rates in the near term,” said the president of Dallas Mortgage Associates.

At Friday midday, the 10-year Treasury note’s yield decreased to 3.90% from yesterday’s close, with the price increasing to 100 25/32.