The Market Composite Index — a measure of total mortgage applications — declined 6.8% from the previous week to 797.8, according to the latest Weekly Mortgage Applications Survey by the Mortgage Bankers Association of America (MBA). Application activity was much higher a year ago when the index stood at 1141.2.

The Purchase Index continued to descend from its all-time high record reached late last month as it sunk 9.4% from the previous week to 402.2, said MBA. The Government Index dropped 9.3% to 225.2, and the Conventional Index decreased 6.5% to 1140.9.

The Refinance Index fell 4.7% from the previous week to 3099.1, the group reported. More than half the reported applications were for refinances.

The 30-year fixed-rate mortgage averaged 5.66% — a decrease of 6 basis points (BPS) from last week — Freddie Mac’s Primary Mortgage Market Survey showed. The rate averaged 5.86% last year at this time.

The 15-year average fell 7 BPS to 4.96%, the mortgage giant reported.

Down 4 BPS, Freddie averaged the 1-year Treasury-indexed adjustable-rate mortgage (ARM) at 3.57%. Meanwhile, the ARM share of total applications nudged down to 26.3%, MBA reported.

Freddie’s chief economist Frank Nothaft said mortgage rates will remain tame for some months to come due to Alan Greenspan’s semiannual testimony about the state of the economy to House members Wednesday — the Federal Reserve Board Chairman “led the markets to believe that the Fed’s actions would be on hold until there was more than sufficient growth in the economy to warrant a change in monetary policy.”

In the secondary lender’s economic outlook released Tuesday, a growth in consumer spending was suggested as consumer confidence rose to 96.8 in January from the previous month’s 91.7, the expectations index rose to 108.1 — the highest since May 2002 — from December’s level of 103.3, and the index measuring consumer confidence about the current economy rose to 80.0 from 74.3.

Even so, Nothaft said mortgage rates will linger at about 6.25% in 2004.

At Bankrate.com, the majority — 55% — of the mortgage experts surveyed this week predicted that mortgage rates will remain unchanged for the next month and a half, while 27% voted for an upturn and 18% forecasted a downturn

At the close of trading Thursday, the 10-year Treasury-note had a yield of 4.04% and price of 101 18/32. A week ago, the note yield closed at 4.16% and the price at 100 20/32.